Property Valuation
In Minnesota, when using the income approach to value a multifamily property, which expenses are typically EXCLUDED from operating expenses?
AProperty taxes
BMortgage payments (debt service)✓ Correct
CInsurance
DProperty management fees
Explanation
Operating expenses used to calculate NOI do not include debt service (mortgage payments) or income taxes. These are financing and taxation decisions specific to the individual investor, not inherent property expenses. NOI represents the property's income-generating ability before financing, making it a more universal metric for comparison.
Related Minnesota Property Valuation Questions
- An appraiser uses three comparable sales and makes adjustments. Comparable A adjusted to $310,000, B to $315,000, and C to $308,000. What is the reconciled value if the appraiser weights them equally?
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