Skip to Content

Course Q&A

Ask clear questions about the Florida real estate course and learn from course-specific answers.

This question has been flagged
1 Reply
0 Views

Why does the income approach use net operating income instead of total rent?

Staff Q&A from the 63Hours team.

Avatar
Discard

Discussion prompt: Which deductions separate the gross income figure from NOI?

Best Answer

Total rent ignores vacancy, collection losses, and the cost of operating the property. The income approach works toward net operating income so the property's income-producing ability can be compared meaningfully. The course then capitalizes that figure. Keep the stated expense convention consistent; gross rent and net operating income should not be substituted for each other in a formula.

Avatar
Discard
Related Posts Replies Views Activity
1
Sep 26
0
1
Sep 26
1
1
Sep 26
0
1
Sep 26
0
1
Sep 26
1