Net operating income is calculated after deducting which of the following?

Net operating income (NOI) is a key financial metric used in real estate to assess a property's profitability before accounting for financing and tax costs. It is calculated as the total income generated from the property, minus all operating expenses associated with managing and maintaining the property.

The correct choice indicates that NOI is derived after deducting all fixed and variable expenses. This includes costs such as property management fees, maintenance, utilities, property taxes, and insurance, among others. By accounting for all operating expenses, investors can gain a clearer picture of the income generated by the property, which assists in evaluating its performance and potential return on investment.

The other options do not accurately represent the components deducted in the calculation of NOI. Annual debt service and tax liability are not included, as these pertain to financing decisions rather than operational performance. Potential rental income and vacancy rates relate more to revenue projections rather than expenses. Management fees alone do not encompass the full range of costs incurred in property operation, so they do not provide a complete calculation method for NOI.