Talk to Jeff

Multifamily money terms

NOI for Apartment Buildings

Net operating income is the number every apartment price, cap rate and loan is built on. Here is how to build it line by line, and where the listing version usually goes wrong.

NOI = effective gross income minus operating expenses. Effective gross income is rent plus other income, minus vacancy and credit loss. Operating expenses are taxes, insurance, management, repairs, owner-paid utilities and reserves. The mortgage, depreciation and income tax are not in NOI. NOI divided by price is the cap rate; NOI divided by the loan payment is DSCR.

$7,740
Screening NOI per door, Georgia 5+ units n=16
$12,650
City of Atlanta 2+ units n=50
$11,320
Core Metro Atlanta n=105
$8,110
Rest of Georgia n=40

Medians of active FMLS listings with usable rent data, October 2026. Listing-reported rents with a standardized expense screen, so real T-12 NOI on older buildings is often lower. Annual NOI per unit.

Apartment buyers

Send me apartment listings that pencil

Apartment and multifamily listings in Georgia from live FMLS. Tell us your unit count, price range and target cap, and we email new matches. Jeff flags the ones worth a closer look.

  • New matching FMLS listings by email
  • Your criteria reviewed by Jeff Crowe, CENTURY 21 The Avenues
  • Starts with Georgia; change types, markets or frequency any time
I’m interested in

No spam. We route you to the right next step.

Worked example: an 8-unit building

An 8-unit building renting at $1,150 a month per unit, listed at $850,000. These are the same inputs the cap rate and NOI calculator opens with, so you can change any line and watch NOI move.

Gross potential rent (8 units x $1,150 x 12)$110,400
Less vacancy and credit loss (5%)-$5,520
Plus other income (laundry, fees)$1,800
Effective gross income$106,680
Less property tax (at purchase price)-$12,000
Less insurance-$6,400
Less management (8% of EGI)-$8,534
Less repairs, turnover and maintenance-$8,800
Less owner-paid water, sewer and trash-$4,800
Less replacement reserves ($300 per unit)-$2,400
Operating expenses (40% of EGI)-$42,934
Net operating income$63,746
Cap rate at $850,000 ask7.50%
NOI per door$7,968

What goes into NOI

Income

  • Gross potential rent: in-place rents from the rent roll, annualized. Not market rent, not pro forma.
  • Vacancy and credit loss: empty units, concessions and rent you bill but do not collect.
  • Other income: laundry, pet, parking, late fees and utility bill-backs the building actually collects.

Operating expenses

  • Property tax at your purchase price, not the seller's current bill.
  • Insurance from a current quote. Georgia premiums have climbed fast; last year's bill is rarely next year's.
  • Management at 8% to 10% of collections, even if you plan to self-manage. Lenders and the next buyer will.
  • Repairs, maintenance and turnover: paint, carpet, appliances, make-ready between tenants.
  • Owner-paid utilities: water, sewer and trash are common on older Georgia buildings; master-metered power or gas is a bigger line.
  • Replacement reserves: roofs, HVAC and water heaters wear out. Budget per unit per year.

Not in NOI

  • Mortgage principal and interest (that is debt service)
  • Depreciation and income tax
  • One-time capital projects (a new roof is capex, the reserve for it is opex)

Where listing NOI goes wrong

  • Pro forma rents presented as in-place.
  • No vacancy, or a 2% vacancy on a building that turned four units last year.
  • Old tax bill. In Georgia, value is assessed at 40% of fair market value and a sale often resets it. Re-run taxes as price x 40% x millage / 1,000.
  • No management fee because the owner self-manages.
  • Missing reserves and repairs booked as capital to keep the expense line small.

That is why the Georgia figures on this site never use the NOI or cap rate a seller types into a listing. Each listing is re-run from its reported rents with the same expense screen, and you should still rebuild it from the T-12 before you offer.

Every listing on apartment buildings for sale in Atlanta and apartment buildings for sale in Georgia can be checked this way: request the rent roll and T-12 from the listing and rebuild the NOI before you trust the cap rate. A leased church works the same way, with the congregation's rent as income; see churches for sale in Georgia. Leased retail, office and warehouse buildings do too, with the lease in place of the rent roll; see commercial properties for sale in Georgia. A development pro forma on land for sale in Georgia projects NOI before the building exists, and asking rents on commercial space for lease in Georgia are a check on the income line.

How to calculate NOI, step by step

  1. Start with gross potential rent. Units x in-place monthly rent x 12. Use the rent roll, not market rents.
  2. Subtract vacancy and credit loss. Use the building history, or 5% to 8% for older Georgia buildings if you do not have it.
  3. Add other income. Laundry, pet, parking, late and utility reimbursement fees that the building actually collects.
  4. List every operating expense. Property tax at your purchase price, insurance quote, management, repairs and turnover, owner-paid utilities, landscaping, pest, admin, and replacement reserves.
  5. Subtract expenses from effective gross income. NOI = effective gross income minus operating expenses. Leave out the mortgage, depreciation, income tax and one-time capital projects.
  6. Sanity-check the expense ratio. Divide expenses by effective gross income. If it looks light for the age and utility setup, find the missing line before you price the building.

From NOI to price and loan

Once NOI is right, two numbers follow. Value at a cap rate: NOI / cap. At the Georgia 5+ unit median ask cap of 5.27%, the example NOI of $63,746 prices at $1,210,000. And the loan: lenders size debt so NOI covers the payment by a set multiple. See DSCR loans for apartment buildings for how that works, and Atlanta and Georgia apartment cap rates for what sellers are asking now.

Build NOI on a real building

Questions buyers ask

What is NOI on an apartment building?

Net operating income is the income the building produces after operating expenses and before the mortgage. NOI = effective gross income (rents plus other income, minus vacancy and credit loss) minus operating expenses (taxes, insurance, management, repairs, owner-paid utilities, reserves).

Does NOI include the mortgage payment?

No. Debt service is below the NOI line. That keeps NOI comparable across buyers with different loans. The mortgage shows up in DSCR and cash flow, not in NOI or cap rate.

What expense ratio should I expect on a Georgia apartment building?

It depends on age, size and who pays utilities. In the worked example on this page, expenses are 40% of effective gross income with owner-paid water. Older buildings, master-metered utilities and smaller unit counts usually run higher. If a seller's statement shows expenses far below that, find out what is missing before you trust the NOI.

Should replacement reserves be in NOI?

Lenders and appraisers on apartment loans usually deduct reserves (often $250 to $350 per unit per year) when they underwrite NOI, so include them. Sellers often leave them out, which inflates NOI and the cap rate.

Why does my NOI drop after I buy a building in Georgia?

Property tax. Georgia assesses at 40% of fair market value, and a sale often resets the value toward the purchase price. A seller who bought years ago may be paying tax on a much lower value. Re-run taxes as price x 40% x the local millage rate divided by 1,000.

What is the difference between NOI and cash flow?

Cash flow is NOI minus debt service (and usually capital spending). A building can have strong NOI and thin cash flow if the loan is large or the rate is high.

Jeff Crowe, CENTURY 21 The Avenues. Figures are screening estimates from active FMLS listings, not appraisals, closed-sale comps or loan quotes. Listing data is provided by the listing brokers and is not verified. Confirm rents, expenses and terms with a T-12, rent roll and a lender.