Expense Inflation Impact Calculator

When operating expenses inflate faster than rents, NOI margin compresses. This calculator sizes the erosion over a hold period.

Current rent

Current opex

Rent growth %

Expense growth %

Hold years

Year N NOI

$705,729

Year 0 NOI

$650,000

Margin change (bps)

-344

How the math works

Future rent = current × (1+rg)^n. Future opex similarly. NOI = rent − opex.

Negative margin change = opex outrunning rent. Even strong-looking deals quietly lose NOI when expense growth exceeds rent growth for multiple years. Model both levers every year.

How to Use

Enter current rent and opex.
Enter rent growth %.
Enter expense growth %.
Enter hold years.
Read year-N NOI and margin change.

Frequently Asked Questions

Typical spread?

Good asset: rent grows 3-4%, expenses 2-3%. Bad asset: rent flat, expenses 5-6%. Gap between rent and expense growth defines NOI trajectory.

Hedges?

Triple-net leases (tenant pays expenses). RUBS on utilities. Fixed-fee property tax appeals. Insurance pooling. Transparency about real expense growth matters more than hoping.

When to exit?

If expense growth outpaces rent growth for 2+ years, NOI margin is eroding. Consider sale before market prices it in. Trailing-12 expense growth is a leading indicator.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.