Property Valuation
An appraiser is evaluating a commercial property with the following: Potential Gross Income = $80,000; Vacancy = 5%; Operating Expenses = $35,000. What is the Net Operating Income?
A$35,000
B$40,000
C$41,000✓ Correct
D$45,000
Explanation
EGI = $80,000 × (1 − 0.05) = $76,000. NOI = EGI − Operating Expenses = $76,000 − $35,000 = $41,000. To solve this, multiply the relevant values: $80,000 and $35,000 at 5%.. The correct answer is $41,000.. This is a common calculation on the Iowa real estate exam.
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