NOI Calculator for Real Estate Investors
Net operating income is the number every property is priced on and every loan is sized on. It is also the number most often flattered in an offering memorandum. Build NOI line by line, put the broker’s version next to an underwritten one, see what the gap costs at a cap rate, and size the loan the way a lender does.
Inputs
Five items differ between the broker’s view and the underwritten one. Everything else is shared.
From rent roll to NOI, underwritten
Green adds, red subtracts. Debt service, income tax and depreciation sit below NOI and are not in it.
Where the marketed NOI and the underwritten NOI part ways
Each step switches one item from the memorandum’s assumption to the underwritten one, in order. The steps add up exactly.
Income statement, side by side
How much the lender will lend
Every test is run on underwritten NOI. The smallest answer is the loan.
Does debt help or hurt?
Leverage is positive only when the property’s yield on price is higher than the loan constant — the yearly payment per unit borrowed. With cap rates where they are in 2026, amortising debt is often more expensive than the asset it buys.
Value at different cap rates
Underwritten NOI divided by the cap rate. The dashed line is the asking price.
Cash flow after the loan payment, by occupancy
Below the line, the owner is topping up the property from their own pocket.
How to read NOI
1. What NOI is, and what it is not
NOI is what the property earns after the costs of running it and before the costs of owning it. Rent and other income, less vacancy and bad debt, less property tax, insurance, utilities, repairs, management and staff. It stops before the mortgage, before income tax and before depreciation, which is what makes it comparable across buyers: two investors with different loans and different tax positions are looking at the same NOI.
Reserves are the grey area. Brokers usually quote NOI before reserves for roofs, lifts, flooring and, in offices, re-letting costs. Lenders deduct them before testing cover. This calculator deducts them in the underwritten column, because a roof is not optional.
2. Five places a marketed NOI is usually flattered
Vacancy. The memorandum quotes today’s occupancy, or a pro-forma one “on lease-up”. A lender uses a structural floor — commonly 5% for apartments, higher for offices — even when the building is full today, because it will not be full every year. Other income. One-off fees from the trailing twelve months get annualised. Property tax. The seller’s bill reflects the seller’s assessment. In many US jurisdictions the sale resets the assessment to the price you pay. Management. Owner-managed properties show no fee; the buyer will pay one, and Fannie Mae underwrites at least 3% of effective gross income even when the owner manages. Reserves. Usually absent. Fannie Mae’s floor is $250 per unit per year.
None of these is dishonest on its own. Together, on the 48-unit apartment preset, they take a fifth out of NOI.
3. A cap rate is a price, not a return
Value is NOI divided by the cap rate. At 5.5%, every dollar of NOI is worth about eighteen dollars of price, so an NOI overstated by a dollar is a price overstated by eighteen. That is why the gap between the two columns matters far more than its size in the income statement suggests. CBRE’s H1 2026 survey found US cap rates broadly flat at around 6.6% for all property, with wide dispersion underneath: stabilised New York multifamily at 5–5.5%, suburban Class A office in major Midwest markets at 10–12.5%.
4. How a lender sizes the loan
Three tests, smallest wins. Loan-to-value caps the loan at a share of price — commonly 65–80% in 2026. Debt service cover caps the yearly payment at NOI divided by a minimum ratio — about 1.20–1.25× for apartments and 1.30–1.45× for office. Debt yield caps the loan at NOI divided by a minimum yield, typically 8–12%. Debt yield ignores the interest rate and amortisation entirely, which is exactly why lenders like it: it cannot be gamed by stretching the loan term.
When the interest rate is above the cap rate, the cover test usually binds well before the LTV headline. On the apartment preset, the bank’s 70% LTV becomes a loan of under half the price.
5. India: what is different
GST is not income. Commercial rent in India attracts 18% GST, charged to the tenant and paid to the government. It passes through the owner’s account and should not be in rent. Maintenance is usually billed directly. In Grade A offices the CAM charge typically goes to the tenant through the facility manager, so it belongs on neither side. Loans are sized on rent. Lease rental discounting lends against the remaining lease rentals, with an LTV ceiling around 65–70%; with amortisation over 10–15 years at current rates, the loan constant runs well above Indian commercial cap rates, which CBRE puts at 7.50–8.40% for Grade A CBD office and 7.15–7.75% for institutional logistics. Purchase costs are higher. Stamp duty and registration add several per cent to the price, varying by state.
Residential is a different asset. A flat in a large Indian city typically lets for 2–4% of its value a year before maintenance, property tax and the month between tenants. Borrow 75% at 9% and the rent does not cover the instalment even fully let. That does not make it a bad purchase. It makes it a bet on price, funded from salary, not an income investment, and the numbers should say so.
What this deliberately leaves out
One year only: no rent growth, no lease-by-lease rent roll, no exit value or IRR — those are in part two, the multi-year property returns calculator. No income tax or depreciation, no tenant improvement and leasing-commission schedule beyond the reserve line, no rate stress on the loan. The presets are illustrative composites anchored on the sources below, not real properties, and none of this is investment advice.
Sources: CBRE H1 2026 Cap Rate Survey, via CRE Daily · CBRE Asia Pacific Q1 2026 yields, via IANS · Fannie Mae Multifamily Guide (management fee and replacement reserve floors).