Underwrite
NOI calculator: get to net operating income without a spreadsheet mess
Every serious return metric starts with NOI. Gross rent looks nice; vacancy, insurance, taxes, repairs, and management take a bite. Enter income and expense lines; get NOI and a simple expense ratio.
Assumptions
Returns stack
- EGI
- —
- NOI
- —
- Expense ratio
- —
When to use
Before you trust a listing package, before you run cap rate, or anytime you want “does this building even operate?” answered in one stack.
When not to
NOI is not cash in your pocket after the loan, and it is not a tax return. Don’t skip vacancy to make the deal look pretty.
Assumptions: Operating expenses exclude mortgage principal/interest, depreciation, and income tax. CapEx is often modeled separately — $0 forever is fantasy.
Worked examples
Input
GPR $36,000 Vacancy 5% OpEx $12,000
Output
EGI $34,200 NOI $22,200
Vacancy takes a bite before expenses — zero vacancy underwrites fiction.
Input
Same rents OpEx $18,000
Output
NOI $16,200
Expense assumptions can kill a deal that looked fine on rent alone.
Common traps
- CapEx reserves are often modeled separately — don’t pretend $0 forever.
- Property management % is real even if you self-manage (your time has a cost).
- “Other income” (laundry, parking) is fine — just don’t invent it.