A commercial property has an effective gross income of $1,640,000. If the total expenses are $1,305,000, what is the Net Operating Income (NOI)?

To determine the Net Operating Income (NOI), you subtract the total expenses from the effective gross income. In this case, the effective gross income of the commercial property is $1,640,000, and the total expenses are $1,305,000.

Using the formula:

NOI = Effective Gross Income - Total Expenses

NOI = $1,640,000 - $1,305,000

After performing the subtraction, we find that the NOI equals $335,000.

This outcome correctly reflects the principle that NOI is a measure of a property's revenue after accounting for operating expenses but before any financing or tax obligations are deducted. The calculations demonstrate how much income the property is generating after covering the necessary expenses, which is crucial for investors and property managers to assess the profitability of a commercial real estate investment.