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The ‘‘Rules of Thumb’’ 55
and net income in turn is a function of vacancy and expenses,
Net Operating Income ¼ Gross Potential Income ÿ Vacancy ÿ Expenses ð3-15Þ
leads us to simplify the difference between gross and net income as
Net Operating Income ¼ Gross Potential Income (1 ÿ evrÞ ð3-16Þ
where evr ¼ expense and vacancy rate (0
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