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How It Works
Gross operating income is what a property actually earns after subtracting estimated vacancy and credit losses from its maximum potential income. It represents the realistic income available to cover expenses and debt.
GSI assumes 100% occupancy with all tenants paying on time. GOI adjusts this ideal by removing the portion lost to vacancies and nonpayment, giving a more accurate revenue picture.
Example Problem
A 10-unit apartment building charges $1,200/month per unit, giving a GSI of $144,000/year. Historical vacancy and credit loss is 7%.
- VCL = $144,000 × 0.07 = $10,080
- GOI = $144,000 − $10,080 = $133,920
Frequently Asked Questions
What is gross scheduled income vs. gross operating income?
GSI is the total rent a property would earn at full occupancy. GOI subtracts vacancy and credit losses from GSI. For a building with $200,000 GSI and 5% vacancy, GOI is $190,000.
Does GOI include other income like parking fees?
Yes. Other income sources such as parking, laundry, and storage fees are typically added to GOI. These can meaningfully boost income, sometimes adding 5–10% to total revenue.
How is GOI used in property analysis?
GOI feeds into the income statement. Subtract operating expenses from GOI to get net operating income (NOI), which is then used to calculate cap rates, DCR, and property valuations.
Related Calculators
- Vacancy & Credit Loss Calculator — estimate income lost to vacancies.
- Net Operating Income Calculator — subtract expenses from GOI.
- Operating Expense Ratio Calculator — measure operating efficiency.
- Gross Rent Multiplier Calculator — quick property valuation from gross income.
- Debt Coverage Ratio Calculator — assess if income covers debt obligations.
Reference: Gallinelli, Frank. 2004. What Every Real Estate Investor Needs to Know About Cash Flow. McGraw-Hill.