What value is typically derived from subtracting total expenses from gross income?

Net Income is derived from subtracting total expenses from gross income because it represents the amount of income that remains after all operating expenses have been accounted for. This calculation is crucial in financial analysis as it provides a clear picture of the profitability of a property or business.

In the context of real estate and property appraisal, determining net income is essential for valuing income-producing properties. It reflects the actual cash flow available to the owner or investor, allowing them to understand the financial performance of the property.

Effective Gross Income refers to the income generated from the property after accounting for vacancy and credit losses but before expenses are deducted. Potential Gross Income represents the maximum possible income that could be generated by a property with no vacancies or collections issues, and it does not consider any expenses. The Capitalization Rate is a metric used to estimate the value of income-producing properties based on their expected net income and is not directly derived from subtracting expenses from gross income. Therefore, net income is the correct value that comes from the subtraction of total expenses from gross income.