NYC Net Operating Income
Calculate Net Operating Income for any commercial property investment. NOI is the starting point for valuing commercial real estate: income after operating expenses, before debt service and capital expenditures.
1Annual Income
2Annual Operating Expenses
3Purchase Price (Optional)
Enter Property Details
Enter the building's income and expenses on the left to see its Net Operating Income.
Understanding Net Operating Income
What is NOI?
Net Operating Income (NOI) is a commercial property's Effective Gross Income (gross rent minus vacancy plus other income) minus all operating expenses (property taxes, insurance, utilities, repairs and maintenance, management, other). It leaves out debt service, capital expenditures, depreciation, and income taxes, so it is the cleanest unlevered number for comparing one property with another. Skyline Properties, Manhattan's off-market brokerage led by Robert Khodadadian with $976M+ closed across 32+ NYC commercial transactions, uses this definition on every Broker Opinion of Value. We then capitalize the NOI at current submarket cap rates (Manhattan multifamily 4.5-5.5%, Midtown Class A office 5.5-7%, FiDi Class B office 7-8.5%) to arrive at an indicated value range.
The NOI Formula
Effective Gross Income = Potential Gross Income - Vacancy & Collection Losses + Other Income
What's Included in Operating Expenses?
- Property Taxes: Annual real estate taxes assessed by local government
- Insurance: Property, liability, and umbrella coverage
- Utilities: Water, sewer, electric, gas (if not tenant-paid)
- Repairs & Maintenance: Routine repairs, landscaping, cleaning
- Property Management: Typically 3-5% of gross revenue
What's NOT Included in NOI?
- ✕Debt service (mortgage principal and interest)
- ✕Capital expenditures (roof replacement, HVAC systems)
- ✕Depreciation and amortization
- ✕Income taxes
- ✕Tenant improvements and leasing commissions
NYC Cap Rate Benchmarks (2024)
Related Calculators & Pillar Guides
On every BOV Robert Khodadadian delivers, Skyline Properties checks the NOI against cap rate, 1031 exchange math, and ground-lease structures. For more on how that plays out in multifamily, see the NYC Multifamily Investment Property pillar guide.
Frequently Asked Questions
What is a good NOI for a commercial property?
It depends on the property type, the location, and what you paid. The number that matters is NOI relative to price, which is the cap rate. In NYC, investors usually look for NOI that produces a 4-6% cap rate on a stabilized property. The more NOI per dollar of price, the better the value.
How do I increase NOI on my property?
Five levers: (1) bring rents up to market, (2) cut vacancy with better marketing or tenant retention, (3) add ancillary income such as parking or signage, (4) lower operating expenses with efficiency improvements, and (5) bill back utilities or common area costs.
What's the difference between NOI and cash flow?
NOI measures how the property performs before financing; cash flow takes debt service out. Cash Flow = NOI - Debt Service. Two investors can buy the same building with different loans and end up with different cash flows, but the NOI stays the same. That is why NOI is the better number for comparing properties.
How is NOI used in commercial real estate valuation?
The income approach to valuation starts with NOI. Property Value = NOI ÷ Cap Rate. A property with $500,000 of NOI valued at a 5% cap rate is worth $10,000,000. Lenders also use NOI to calculate the Debt Service Coverage Ratio (DSCR) when they size a loan.