Example
A triplex rents for $3,000 a month, $36,000 a year. Allow 5% for vacancy ($1,800), leaving $34,200. Operating expenses are property tax $4,200, insurance $1,500, repairs $3,000, utilities $1,200 and management at 8% of collected income ($2,736): $12,636 in all. NOI is $34,200 − $12,636 = $21,564. At a 6% cap rate, that NOI supports a value of about $359,400.
In an operating statement it looks like…
Trailing 12 months: gross scheduled rent $36,000; vacancy and credit loss $1,800; operating expenses $12,636; net operating income $21,564.
Good to know
Leave out the mortgage, depreciation and big one-off improvements like a new roof: those belong to the owner’s financing and tax picture, not to how the property runs. A seller’s NOI that skips vacancy or management, or uses this year’s low tax bill before a reassessment, flatters the price. Careful buyers rebuild NOI from the leases and the tax bill themselves.
Plain English, not legal advice. Last reviewed September 29, 2026.