what expenses are included in 'net operating expenses'?

I attempting to compare possible properties and better understand the financial viability.
In Buying Property - Asked by Michael M. - Oct 5, 2008
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Raymond B.
Livonia, MI

Technically, the term "net" orginally meant that the tenant paid all expenses associated with the operation of the building. Over the years, brokers have modified this with net, double net, and triple net (or absolute net). Triple net or absolute net now means you pay all building related expenses. Net and double net can vary depending on who you talk to and the property type. On a net property, you can generally count on paying your own utilities and possibly general maintenance, but not taxes and insurance.

Oct 6, 2008
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Glen W.
Lender/Mortgage Broker
Atlanta, GA

For the calculation of NOI for a valuation standpoint, every expense is included except the mortgage payment. Whether the leases are NN or NNN is a different story. For that answer you will have to look at the actual leases

Oct 6, 2008
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Matt D.
Franklin, TN

Often large repairs (like a $15k roof) are not included in the operating expenses, but are capitalized.

Oct 8, 2008
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Josh W.
Charleston, SC

Net Operating Income or NOI is equal to a property's yearly gross income less operating expenses. Gross income includes both rental income and other income such as parking fees, laundry and vending receipts, etc. All income associated with a property. Operating expenses are costs incurred during the operation and maintenance of a property. They include repairs and maintenance, insurance, management fees, utilities, supplies, property taxes, etc. The following are not operating expenses: principal and interest, capital expenditures, depreciation, income taxes, and amortization of loan points. Net operating income is calculated like this.

Gross Rents Possible 100,000
Other Income 3,000
Potential Gross Income 103,000
Less vacancy Amount 2,000
Effective Gross Income 101,000
Less Operating Expenses 31,000
Net Operating Income 70,000

Oct 9, 2008
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Gregory G.
San Francisco, CA

All operating expenses.
Gregory Garver - Commercial Real Estate Broker
Broker License# 01716531

Jun 12, 2011
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