Once we know the Gross Potential Income of a real estate investment property,we arrive at the Gross Operating Income by subtracting out the estimated annual losses due to non-payment or vacancies.
Time Required: 5 minutes
- Let's use our already calculated Gross Potential Income result of $54,000. This is if all units are full and all rents paid.
- Based on experience, the current market and rental occupancies, we estimate that our losses due to vacancies and non-payment will be 5%.
- $54,000 *.05 = $2700
- $54,000 - $2700= $51,300 for our Gross Operating Income
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