Net Operating Income on a $100,000 Rental Property

A $100,000 rental at $850 a month in rent produces about $6,246 of net operating income a year under standard expenses, an expense ratio of 36% and a 6.2% cap rate. At a 6.5% market cap rate that NOI is worth $96,089.

The income statement on a $100,000 property

Assumptions: 5% vacancy, taxes at 1.2% of price ($1,200 a year), insurance at 0.5% ($500), and 5% maintenance, 5% capital reserves and 8% management on collected income. Taxes vary the most by state, so replace them with the real bill.

Gross scheduled income: $850 a month (0.85% of price), $10,200 a year
Effective gross income after vacancy: $9,690
Taxes and insurance: $1,700
Maintenance, reserves and management: $1,744
Total operating expenses: $3,444 (35.5% of collected income)
Net operating income: $6,246, or $520 a month

See what $10,000 of NOI is worth at every cap rate.

NOI at different rents on a $100,000 property

Rent as a percent of price is the fastest screen. Each $100 a month of rent adds $935 of NOI after vacancy and percentage expenses, and the expense ratio falls as rent rises because taxes and insurance are fixed.

Monthly rent	Rent / price	NOI	Expense ratio	Cap rate
$500	0.5%	$2,974	48%	2.97%
$600	0.6%	$3,909	43%	3.91%
$700	0.7%	$4,844	39%	4.84%
$800	0.8%	$5,778	37%	5.78%
$900	0.9%	$6,713	35%	6.71%
$1,000	1.0%	$7,648	33%	7.65%
$1,100	1.1%	$8,583	32%	8.58%
$1,200	1.2%	$9,518	30%	9.52%

How property taxes change the NOI

At $850 rent. Effective tax rates run from under 0.5% in Hawaii to over 2% in New Jersey, Illinois and parts of Texas, and NOI moves dollar for dollar.

Tax rate	Annual taxes	NOI	Expense ratio	Cap rate
0.5%	$500	$6,946	28%	6.95%
0.8%	$800	$6,646	31%	6.65%
1.0%	$1,000	$6,446	33%	6.45%
1.2%	$1,200	$6,246	36%	6.25%
1.5%	$1,500	$5,946	39%	5.95%
2.0%	$2,000	$5,446	44%	5.45%
2.5%	$2,500	$4,946	49%	4.95%

How vacancy changes the NOI

Each point of vacancy costs $84 of NOI at this rent. A month empty every two years is about 4%.

Vacancy	Lost income	NOI	Cap rate
0%	$0	$6,664	6.66%
3%	$306	$6,413	6.41%
5%	$510	$6,246	6.25%
8%	$816	$5,995	5.99%
10%	$1,020	$5,828	5.83%
15%	$1,530	$5,409	5.41%

What this NOI is worth at market cap rates

$6,246 of NOI valued at each cap rate, and the gap to the $100,000 price. A buyer in a 5% market and a buyer in an 8% market are not looking at the same property.

Market cap rate	Implied value	vs $100,000
4%	$156,145	$56,145
5%	$124,916	$24,916
6%	$104,097	$4,097
7%	$89,226	-$10,774
8%	$78,073	-$21,928
9%	$69,398	-$30,602
10%	$62,458	-$37,542

Run the $100,000 property yourself

Preloaded with the numbers above. Change the rent, taxes, insurance or expenses to match the property.

Income

Monthly rent (all units)$Scheduled rent at full occupancyUnitsFor per-unit figures. 1 for a house or condo.Other monthly income$Parking, laundry, pet rent, storage, utility billbackVacancy and credit loss%$510 a year. 5 to 8% is typical.

Operating expenses

Annual property taxes$Use the bill after reassessment, not the seller'sAnnual insurance$Landlord policy, plus flood or wind where neededHOA dues (monthly)$Owner-paid utilities (monthly)$Water, sewer, trash, gas, common-area electricOther monthly expenses$Lawn, snow, pest, licenses, legal, accounting

Price and market (optional)

Purchase price or value$Leave at 0 if you only need NOI. Turns on the cap rate.Market cap rate%What comparable properties sell at. Values the NOI.

Net operating income (annual)

$6,246

$520 a month

Typical expenses · 36% ratio

Typical. 30 to 45% of collected income covers expenses, the range most single-family and small multifamily rentals land in with every cost counted.

Income statement

Gross scheduled income: $10,200
Vacancy and credit loss: -$510
Effective gross income: $9,690
Property taxes: -$1,200
Insurance: -$500
Maintenance: -$485
Capital reserves: -$485
Management: -$775
Total operating expenses: -$3,444
Net operating income: $6,246
Expense ratiooperating expenses / effective gross income: 35.5%
NOI marginNOI / effective gross income: 64.5%

What this NOI is worth

Value at a 6.50% cap rate: $96,089
Cap rate at this price$6,246 / $100,000: 6.25%
Priced above that value by: $3,911
Gross rent multiplierprice / gross scheduled income: 9.8

What moves it

Each $100/mo of rent addsof annual NOI after vacancy and percentage expenses: $935
Each point of vacancy costsof annual NOI: $84
Each $1,000 of NOI is worthat a 6.50% cap rate: $15,385

$100,000 rental NOI questions

What is the NOI on a $100,000 rental property?

At $850 rent with 5% vacancy, taxes of $1,200, insurance of $500 and 18% of collected income for maintenance, reserves and management, net operating income is about $6,246 a year, or $520 a month. That is an expense ratio of 36%. Your taxes and insurance will move it.

What is a good NOI for a $100,000 property?

One that produces the cap rate comparable rentals sell at. In a 5% market a $100,000 property needs about $5,000 of NOI to be fairly priced; in an 8% market it needs $8,000. At $850 rent this one produces $6,246, a 6.2% cap rate.

How much do property taxes change the NOI on a $100,000 rental?

Dollar for dollar. Taxes at 0.5% of price cost $500 a year and at 2.5% they cost $2,500, a $2,000 swing in NOI on the same rent. At a 6.5% cap rate that is a $30,769 difference in what the property is worth. Use the bill you will pay after the sale, not the seller's.