Net Operating Income is the foundation of commercial real estate valuation. Pre-filled with Hawaii market data. Effective Gross Income − Operating Expenses, calculated before debt service. NOI drives cap rates, loan sizing, and property value.
Avg Cap Rate
4%
Median Price
$743K
Property Tax
0.31%
Vacancy Rate
7.4%
Local Factors
Net Operating Income
$87,784
$7,315/mo
What does this mean?
A 70%+ operating margin is rare and exceptional. Verify your expense assumptions are realistic — low expenses can signal deferred maintenance or under-managed properties.
Net Operating Income (NOI) is the total income a property generates after all operating expenses are deducted, but before debt service (mortgage payments), capital expenditures, and income taxes. It's the single most important number in commercial real estate.
Why NOI matters: Lenders use NOI to size loans (via DSCR). Appraisers use NOI to determine property value (via cap rate). Investors use NOI to compare properties and forecast returns. If you only know one number about a deal, it should be NOI.
What's NOT included in NOI: Mortgage payments, depreciation, capital improvements, income taxes, and amortization. These are excluded because NOI measures the property's operating performance independent of financing and tax strategy.
Operating margin (NOI ÷ Effective Gross Income) tells you what percentage of every rental dollar survives as profit. Most stabilized multifamily properties run 40–60% operating margins. Below 30% is a warning sign.
Keep running the numbers
Hawaii NOI is the foundation. Now build on it.
Calculate the capitalization rate to evaluate a property's potential return based on its net operating income.
Calculate the Debt Service Coverage Ratio to see if a property's rental income covers its loan payments.
Estimate the impact of vacancy on your rental income and returns.
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