Property Valuation
Net Operating Income (NOI) is calculated as:
AGross potential income minus all expenses including mortgage payments
BEffective gross income minus operating expenses (excluding debt service)✓ Correct
CGross potential income minus vacancy loss only
DEffective gross income minus property taxes only
Explanation
NOI = Effective Gross Income − Operating Expenses (excluding debt service/mortgage payments). It represents the income a property generates from operations before financing costs, and is used in the income approach and cap rate calculations.
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