Net Operating Income
Learn How to Calculate the Net Operating Income for Your Rental Property.
What is Net Operating Income?
The Net Operating Income is the amount of income a property can generate after deducting Operating Expenses. The Net Operating Income is a strong indication of a properties revenue generating potential. In large multi-family (larger than 5 units) and commercial real estate the Net Operating Income is used in the Income Capitalization Approach to value and appraise property.
How to Calculate Net Operating Income
The Net Operating Income is calculated by taking the Gross Operating Income that the rental property produces and subtracting the Operating Expenses.
Monthly Net Operating Income = Monthly Gross Operating Income - Monthly Operating Expenses
Annual Net Operating Income = Annual Gross Operating Income - Annual Operating Expenses
Monthly Net Operating Income = Monthly Gross Operating Income - Monthly Operating Expenses
Annual Net Operating Income = Annual Gross Operating Income - Annual Operating Expenses
Net Operating Income Example
The example below shows how we calculated the Net Operating Income using our Free Rental Property Spreadsheet.
Monthly Net Operating Income = Monthly Gross Operating Income - Monthly Operating Expenses
Monthly NOI = $1,146 - $592
Monthly NOI = $554
Annual Net Operating Income = Annual Gross Operating Income - Annual Operating Expenses
Annual NOI = $13,751 - $7,100
Annual NOI = $6,651
Monthly NOI = $1,146 - $592
Monthly NOI = $554
Annual Net Operating Income = Annual Gross Operating Income - Annual Operating Expenses
Annual NOI = $13,751 - $7,100
Annual NOI = $6,651
Download our Free Rental Property Spreadsheet to Calculate your Rental Property Net Operating Income and Analyze the Rental Cash Flow for your Rental Properties.
