Learn how to calculate your Gross Operating Income for your Rental Properties.
What is Gross operating Income?
Gross Operating Income (also called Effective Gross Income) is the potential rental income less any vacancy and credit losses. This is the amount of rental income that the owner can reasonably and realistically expect to collect after accounting for property vacancies, tenant concessions and other income opportunities.
Gross Operating income Formula
The Gross Operating Income is calculated by taking the Gross Potential Income plus Other Income and subtracting vacancy losses and tenant concessions.
Gross Operating Income = Gross Potential Income + Other Income - Vacancy Losses - Tenant Concessions
GROSS OPERATING Income Example
Let's assume we have an apartment complex that has 15-units, with laundry and vending on the property.
Here's a breakdown of monthly rents for each unit type as well as vending and laundry revenues:
(6) 3 bed, 2 bath properties generating $1,250 per month (5) 2 bed, 1 bath properties generating $1,000 per month (4) 1 bed, 1 bath properties generating $850 per month Laundry income of $500 per month Vending income of $250 per month
Let's assume that each unit will have one month of vacancy loss from tenant vacancy (-8.33%).