Property Management
Net Operating Income (NOI) in a property management context is calculated as:
AGross income minus mortgage payments
BEffective gross income minus all operating expenses (excluding debt service)✓ Correct
CGross income minus property taxes only
DMonthly rent times 12
Explanation
NOI = Effective Gross Income - Operating Expenses. Operating expenses include property taxes, insurance, maintenance, management fees, utilities, and reserves for replacement.
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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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Earnest MoneyA deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
Math Concepts
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