Property Valuation
An appraiser is valuing a rental property and estimates annual gross income of $60,000 with a vacancy and credit loss of 5% and operating expenses of $20,000. What is the net operating income (NOI)?
A$37,000✓ Correct
B$38,000
C$40,000
D$57,000
Explanation
Effective Gross Income = $60,000 − ($60,000 × 5%) = $60,000 − $3,000 = $57,000. NOI = $57,000 − $20,000 operating expenses = $37,000.
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