In property management, what is typically defined as the income generated from rental properties?

The correct answer is Net Operating Income, which is defined as the income generated from rental properties after deducting operating expenses but before factoring in financing costs and taxes. It is a critical measure for property managers and investors because it provides a clear picture of the property's profitability from its operations alone.

Net Operating Income includes all sources of revenue generated from the property, such as rent and any additional fees collected from tenants, while subtracting the costs directly associated with running and maintaining the property, which include things like property management fees, maintenance costs, property taxes, and utilities. This metric is essential for evaluating the financial health of a property and assists in making informed decisions regarding investments, budgeting, and operational efficiency.

In contrast, gross revenue refers to the total income before any expenses are taken into account, providing a less nuanced understanding of profitability. Net income typically includes all revenues and expenses—including financing costs and taxes—thereby offering a bottom-line figure rather than focusing solely on operational performance. Capital gain pertains to the increase in the property’s value over time upon sale and does not directly relate to the income generated from ongoing rental operations.