Property Management
A net operating income (NOI) in property management is calculated as:
AGross potential income minus vacancy and collection losses minus operating expenses (excluding debt service)✓ Correct
BGross rents minus mortgage payments
CTotal revenue minus all taxes
DGross rents minus only property taxes
Explanation
NOI = Gross Potential Income - Vacancy/Credit Losses = Effective Gross Income - Operating Expenses (excluding mortgage payments and income taxes). NOI is the income available before debt service and is used in the income capitalization approach to value.
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