Utilities - If you have a RUBS (Ratio Utility Billing System) program where you're putting the utilities back on the tenant, utilities will come under operating expenses and then with your gross income you will have your RUBS other income coming in for the utilities and that offsets itself.Repairs - Examples: If we have to repair an appliance, if we have to repair the parking lot (maybe we have potholes), or maybe we have to repair the roof.Staff Cost - on-site leasing agent, on-site maintenance staff, etc.Operating expenses are expenses that the property incurs over the course of normal business. Those items - plus a whole lot more - are going to come under gross income. Gross means everything, so gross income means every single dollar of income, whether through rents, late fees, laundry, and all the examples we mentioned above. It doesn't matter how it's produced - it's going to fall under gross income. Rents (all the rent money that comes in)īasically, every single dollar of income produced by the property.What is gross income? With a multi-family property, we have: To understand NOI, we have to understand what gross income and operating expenses are - the two components in the formula. There is a formula that we use to calculate NOI - NOI = your gross income minus your operating expenses. In this blog post, I’m going to walk you through what NOI is and how you can correctly calculate it for your property. But there is a big mistake some people make when calculating NOI. Mastering the net operating income or NOI of a property is crucial to properly understanding underwriting and managing your real estate portfolio.
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