Project Carter
Commercial NOI Calculator
Work out the net operating income on a commercial property. Enter an optional property price, the potential rental income and any other income, then the operating expenses the owner carries. The numbers update live, and you can take away a one-page PDF. It is an estimate to help you think, not financial advice.
Report
Shown on the PDF and used to name the report if you save it to your account.
Property
Enter this to see the net operating income as a percentage of the price paid, and to work out usable equity below.
Leave blank if the property is unencumbered or you're assessing a fresh purchase.
Income
Gross market rent for a fully let building, before expenses.
Parking, signage, storage, vending, licence fees and other ancillary income.
Operating expenses
Tick "recovered from the tenant" on any outgoing the lease passes through, and it drops out of the net operating income.
The agent's fee for running the building.
Owners corporation or body corporate levies where the property is strata titled.
Recoverable in some states and lease types, not others.
Cleaning, security, pest, fire services, accounting and anything else not listed.
Valuation
A market capitalisation rate. Net operating income divided by this is an implied property value. Blank leaves the value out.
- Net operating income
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- Net operating income as a %
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- As a % of property price
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- Implied property value
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- Usable equity (up to 70% LVR)
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Your net operating income
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How the numbers work
- Total gross operating income is the potential rental income plus any other income (parking, signage, storage and the like). This calculator does not deduct a vacancy allowance, so it is a fully let figure.
- Operating expenses are the costs of running the building: insurance, maintenance and repairs, property management, council and water rates, strata or body corporate levies, marketing, land tax and anything you add to the "other" line. Property management can be entered as a dollar figure or as a percentage of gross operating income.
- Recovered from the tenant. Tick this on any outgoing the lease passes through to the tenant, property management included, and it is left out of total operating expenses, so it does not reduce the net operating income. The total recovered is shown for reference.
- Net operating income is total gross operating income less total operating expenses (net of any recoveries). It excludes loan interest, income tax, depreciation and one-off capital works.
- Net operating income as a % is the net operating income divided by gross operating income. As a % of property price is the net operating income divided by the property price you enter, the going-in yield on the price paid.
- Implied property value is the net operating income divided by the cap rate you enter. Leave the cap rate blank and no value is shown. A lower cap rate implies a higher value.
- Usable equity (up to 70% LVR) is 70% of the property price (or the implied value, if you haven't entered a price) less any existing loan against the property. It's a guide to how much you could look to release or use as a deposit elsewhere, not a lending decision.
Common questions
What is net operating income (NOI)?
Net operating income is a property's gross operating income (rent plus other income such as parking or signage) less its operating expenses. It excludes loan interest, income tax, depreciation and one-off capital works, so it measures what the building itself earns.
How do I value a commercial property from its NOI?
Divide the net operating income by the capitalisation rate. For example, $100,000 of NOI at a 6% cap rate implies a value of about $1.67 million. A lower cap rate implies a higher value. Enter a cap rate and the calculator shows the implied value.
Which outgoings can be recovered from a commercial tenant?
It depends on the lease. Under a net lease the tenant usually pays most outgoings, such as rates, insurance and maintenance, and sometimes management. Tick "recovered from tenant" on any line your lease passes through and it drops out of your operating expenses, so it does not reduce your NOI.
What is the difference between NOI as a % of income and as a % of price?
NOI as a % of income shows how much of the rent is left after running costs. NOI as a % of the purchase price is the going-in net yield on what you paid.
Does this NOI calculator allow for vacancy?
No. It is a fully let, single-year figure. If you expect vacancy, reduce the rental income you enter to allow for it.