Which option is NOT a key component of net operating income (NOI)?

Net operating income (NOI) is a vital financial metric used in real estate to evaluate the income-generating potential of a property. It is calculated by taking the gross income generated by the property and subtracting operating expenses. Key components that contribute to NOI include gross potential income (GPI), operating expenses, and adjustments for vacancy or credit loss.

GPI represents the total revenue a property could generate if it were fully leased at market rent, serving as the starting point for calculating NOI. Operating expenses encompass all costs associated with managing and maintaining the property, such as maintenance, property management fees, property taxes, and insurance. Vacancy and credit loss account for the income that is lost due to unoccupied units or tenant defaults, further refining the calculation of effective income and impacting the final NOI.

The option that does not align with these components is the credit basis. While the credit basis may pertain to financial analysis or investment strategy in certain contexts, it does not directly factor into the computation of NOI. Understanding these distinctions is essential for anyone involved in asset management, as they influence investment decisions and property evaluations.