The formula to find net operating income involves which of the following?

Net operating income (NOI) is a critical metric in real estate valuation as it provides an indication of the profitability of a property before taking into account financing and income taxes. To calculate NOI, one begins with gross income generated from the property, which includes rents and any other income sources, and then subtracts operating expenses.

Operating expenses refer to the costs necessary to maintain and manage the property, including property management fees, maintenance, utilities, and property taxes. By subtracting these expenses from the gross income, you arrive at a clearer picture of the property's operating profitability, which is represented by the net operating income. This formula is essential for property owners and investors to assess the financial performance of real estate assets.

The other choices focus on different aspects of real estate financial analysis but do not provide the correct breakdown needed for NOI calculation. For instance, effective gross income considers vacancy losses or other adjustments, while market value related to cap rates deals with valuation rather than operational profitability. Therefore, the correct formula to derive net operating income is indeed gross income minus operating expenses, capturing the essence of a property's operational performance.