NOI, OER & Cap Rate

Calculates net operating income, the operating expense ratio, and the implied cap rate for an income property. Inputs are effective gross income, a line-item operating expense budget, and a purchase price or value.

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NOI, OER & Cap Rate Calculator

Inputs

Effective Gross Income (annual)

Property taxes

Insurance

Management fee

Repairs & maintenance

Utilities (landlord-paid)

Administrative

Other operating expenses

Purchase price / value

EGI → NOI

Effective Gross Income

$2,209,500

Property taxes

−$275,000

Insurance

−$81,600

Management fee

5.0% of EGI

−$110,475

Repairs & maintenance

−$100,000

Utilities (landlord)

−$72,000

Administrative

−$42,000

Other

−$30,000

Net Operating Income

$1,498,425

Operating Exp. Ratio

32.2%

$711,075 opex

NOI

$1,498,425

before debt & capex

Going-in Cap Rate

5.99%

NOI ÷ $25,000,000

At this NOI, value = NOI ÷ cap rate. At a 5.5% cap rate the implied value is $27,244,091; at 6.5% it is $23,052,692. Cap rates and value move inversely.

Learn the concept

This calculator comes from the free Real Estate Finance course, where the concept is taught with readings, worked examples, and practice questions.

Open Real Estate Finance

Built by Devon Coombs, CPA, MBA, Teaching Professor of Finance at Santa Clara University.