Do HOA fees count in NOI?
Counts — a straight operating expense
Yes. If the owner pays the HOA fee, it is an operating expense and it reduces NOI directly. This is the main reason a condo's cap rate reads lower than the same rent would suggest in a single-family house.
Why it matters
HOA fees are large, fixed, and they rise. They are also the expense most often left out of a quick calculation, because they do not feel like the landlord's cost in the way a repair does.
What it does to the number
A $300/month HOA is $3,600 a year. On a $250,000 condo, leaving it out inflates the cap rate by about 1.4 percentage points — enough to turn a fair deal into an apparently solid one.
Worth knowing
- Include it whenever the owner pays it, which is nearly always in a rented condo.
- Check what the fee covers. Where it includes water or exterior insurance, do not also count those separately.
- Ask about the reserve study and any planned special assessment before you model it. A special assessment is CapEx, not an operating expense.
- HOA increases outpace rent increases more often than owners expect — model the expense growth rate honestly.
The rule this calculator locks
HOA is a line in the operating-expense breakdown, alongside tax, insurance, management, maintenance and utilities.