In the context of net operating income, what do operating expenses include?

Operating expenses encompass all costs associated with managing and maintaining a property. This broad category includes various ongoing expenses necessary for the day-to-day operations of real estate assets, such as property management fees, maintenance and repair costs, property taxes, utilities, insurance, and other expenses necessary to keep the property operational and in good condition.

By including all costs related to the management and maintenance of the property, net operating income (NOI) can provide a more accurate reflection of the property’s financial performance. This comprehensive approach allows property owners and investors to assess profitability and the overall financial health of the investment, making informed decisions based on a complete understanding of potential costs.

In contrast, focusing only on specific types of expenses, like external management fees, renovation costs, or insurance costs, would result in an incomplete picture of the property's operational costs and potentially misleading financial assessments.