Annual income and itemized operating expenses down to NOI.
Item
Annual
Gross potential income
31,200
Vacancy allowance
-1,560
Effective gross income
29,640
Property tax
-3,000
Insurance
-1,500
Management
-2,400
Maintenance & repairs
-1,800
Utilities
-600
Other
-500
Net operating income
19,840
Estimates only — not financial, tax, or professional advice.
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What it calculates: Net Operating Income, Cap Rate, Effective Gross Income, Total Operating Expenses.
Updated 5 June 2026 · Transparent assumptions
Vacancy takes $1,560 and operating costs take $9,800 — a 33% expense ratio
Gross rent of $30,000 plus $1,200 of other income gives $31,200. A 5% vacancy allowance removes $1,560, leaving effective gross income of $29,640. Operating expenses of $9,800 across tax, insurance, management, maintenance, utilities and other leave NOI of $19,840, which against a $350,000 price is a 5.67% cap rate.
The expense ratio of 33.06% is the figure to sanity-check. Residential rentals commonly run 35-50% once management and honest maintenance reserves are included; anything reported well below 30% usually means a cost has been left out or reclassified as capital.
Mortgage payments, depreciation and capital works
NOI measures the building, not the deal. Mortgage interest and principal are excluded because they belong to whoever bought it rather than to the property. Depreciation is excluded because it is an accounting entry rather than cash. Capital expenditure — a new roof, a boiler replacement — is excluded because it is investment rather than operation.
That last exclusion is where NOI is most often flattered. A property needing $4,000 a year of major works still shows a clean NOI if those are booked as capital, and two sellers can present the same building at very different cap rates purely through classification. The maintenance line you enter is the one that decides whether this figure is honest.
Even a well-run single-family rental turns over
A 5% vacancy allowance is about eighteen days a year, which is optimistic for a single unit where one tenant change can mean a month empty. Multi-unit properties tend to average better because the turnover is spread; a single house is either fully let or fully empty.
Leaving vacancy at zero overstates NOI by the full allowance and, at a 5.67% cap rate, overstates implied value by a similar proportion. It is the single easiest line to omit and the one most likely to make a marginal deal look workable.
One year, at today\u2019s rents, with no growth and no exit
NOI is a snapshot of one period. It says nothing about whether the leases in place are above or below market, whether rents in the area are rising, or what the building will sell for. A 5.67% cap rate on a property with rents 20% under market is a different investment from the same yield at market rent.
It also assumes the expense figures are complete and current. Property tax reassessment after a sale is a common surprise in jurisdictions that reassess on transfer, and insurance in several markets has risen faster than any other line. Verify both against actual bills rather than the seller\u2019s figures.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Gross Rent MultiplierGRM from price and rent, with the value the market multiple implies and the gap against your price.
InvestmentProject lump-sum and regular-contribution growth, plan a goal, and solve future vs present value, with fees and inflation.
Regular InvestmentProject how regular monthly contributions grow over time — SIP-style investing, dollar-cost averaging, inflation-adjusted value, and long-term goals.
Retirement WithdrawalEstimate how long savings last under regular withdrawals (SWP) — drawdown, safe withdrawal rate, inflation, and a year-by-year schedule.
Returns are assumptions, not guarantees. Actual results may vary because of market performance, taxes, fees, inflation, and timing. This is an educational projection, not investment advice.
Published the calculator with its formula, worked example, assumptions, limitations and a bespoke guide, and added an automated formula test suite covering it.
Verified that every expense line reduces NOI and that the implied cap rate is NOI over the price, so the two figures cannot drift apart.
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