It is useful to think of net cash flow realized from an investment in an income property as
a combination of the relationships shown in Exhibit 9–8. Rental income for a property is
calculated based on rents specified in every lease made with individual tenants. As we have
discussed, rents specified in leases may be flat, stepped up, indexed, or based on some level
of business performance. Furthermore, because existing leases have been made in previous
periods and for different maturity periods, some leases may be due to expire, or “rollover,”
after a property is acquired. Therefore, rentable income in any year is a reflection of leases
executed in previous years as well as leases being executed currently. As Exhibit 9–8 shows,
in addition to rent, many properties produce other income from other services provided (such
as laundry facilities in apartments, cell towers atop office buildings, covered parking, etc.).