Operating net
What is it?
The KPI represents the net asset from the property's operation, which means income minus operating costs. Where:
Rental income: The total amount generated by renting out the property.
Operating costs: The costs directly linked to the property's operation and maintenance, including, for example, property taxes, repairs and maintenance.
Net operating income is an important metric because it represents the net financial income generated from the property's daily operations. It is used to assess the property's profitability and sustainability as well as to monitor and optimize the economy within property management. Having a positive operating net is desirable and indicates that the property generates sufficient income to cover its operating costs and thus contributes to surplus.
Note that this key figure is not accumulated for the current year, but shows net for the time period selected.
How is it calculated?
Rental income - Operating expenses = Net operating income
* Only includes selected accounts in settings.
** Includes only net for specified time period.
Why is it important to follow?
The following are some reasons why it is important to follow the KPI:
Profitability assessment: Net operating income gives an indication of how profitable the property is by measuring the net income from operating activities. A positive net operating income indicates that the property generates sufficient income to cover its operating costs.
Efficient use of resources: The measure helps to evaluate how efficiently resources are used to operate and maintain the property. It provides insights into how well costs are managed in relation to revenues.
Decision-making: Net operating income is used as an important decision-making tool for property owners and managers. It gives them information about the financial health of the property and can be used to make informed decisions about resource allocation and strategies.
Risk management: Monitoring the operating net is part of risk management in the property industry. It provides early warning if there is an imbalance between income and expenses, which can help take timely action.
Evaluation of investments: Net operating income is also relevant when evaluating investments in real estate. It provides investors and property owners with insight into the return on their investments and can be used to assess whether a property is a profitable investment.
In summary, the key figure is a central indicator for assessing the property's profitability and financial health. It provides an overall picture of how well the property is performing and enables informed decisions to optimize finances and resource use.
Created by Homepal
1/17/2024
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