Property Valuation
What is an 'income-expense analysis' in Hawaii rental property evaluation and what line items does it include?
AA. A federal tax form required for rental properties in Hawaii
BB. An analysis of all income sources and operating expenses to calculate NOI; income includes rent, fees, and other income; expenses include insurance, taxes, maintenance, management, utilities, and reserves✓ Correct
CC. An analysis only of gross income and mortgage payments
DD. A requirement for properties exceeding $1 million in value
Explanation
An income-expense analysis (operating statement) for Hawaii rental property includes: Income: gross scheduled rent, less vacancy/credit loss, plus other income (parking, laundry, fees) = EGI. Expenses: property taxes, insurance, management fees, maintenance/repairs, utilities, advertising, landscaping, reserves.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Math Concepts
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