Property Management
Which of the following is typically NOT included in the operating expenses used to calculate NOI?
AProperty management fees
BDepreciation✓ Correct
CProperty insurance
DMaintenance and repairs
Explanation
Depreciation is a non-cash accounting expense that is NOT included in operating expenses for purposes of calculating NOI in real estate investment analysis.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Math Concepts
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