A rental property income statement shows whether your property profits after expenses. It is the report landlords and investors rely on for taxes, mortgages and pricing. Here is how to build one.
Step 1: List Rental Income
Include rent received, deposits that become income, laundry/parking fees and any other revenue. Use the period (monthly/annually) consistently.
Step 2: Subtract Operating Expenses
- Property management fees.
- Repairs and maintenance.
- Insurance, taxes and HOA/community fees.
- Utilities you pay, advertising and legal costs.
- Mortgage interest (principal is not an expense on the P&L).
Step 3: Add Depreciation
Depreciate the building (not land) over its depreciable life to reflect wear — a non-cash expense that reduces taxable income.
Step 4: Calculate Net Operating Income
Net Operating Income (NOI) = rental income minus operating expenses (before debt service and tax). NOI drives valuations; net cash flow adds mortgage payments.
FAQ
Is mortgage principal an expense?
No — only interest is an expense on the income statement; principal is a balance-sheet item.
Why does NOI matter?
Buyers and banks value properties using NOI, so accuracy is critical.
Related: Income Statement Basics and Forecasting.