Property Management
Operating expenses used to calculate NOI in property management include:
AMortgage principal and interest payments
BProperty taxes, insurance, maintenance, utilities, and management fees✓ Correct
CCapital improvements and depreciation
DThe owner's personal income taxes
Explanation
Operating expenses include taxes, insurance, maintenance, repairs, utilities, management fees, and reserves for replacement — but NOT mortgage debt service or capital improvements, which are accounted for separately.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
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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