Property Management
When calculating net operating income for an apartment building, which of the following is deducted from effective gross income?
AMortgage payments
BIncome taxes on rental income
COperating expenses including maintenance, management fees, insurance, and taxes✓ Correct
DDepreciation
Explanation
NOI = EGI − Operating Expenses. Operating expenses include maintenance, management fees, insurance, and property taxes.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Math Concepts
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