The starting point in calculating net operating income is the total annual income the property would produce assuming 100% occupancy and no collection losses. This is commonly referred to as:A. effective Gross IncomeB. potential Gross IncomeC. operating expensesD. capital expenditures
Potential gross income refers to the gross income at 100% occupancy. On the other hand, effective gross income takes into account vacancy as well as other variables like collection loss.
