Real Estate Math
A Nevada landlord pays $2,400 in annual property taxes, $1,800 in insurance, $3,600 in maintenance, and $7,200 in mortgage payments on a rental property generating $18,000/year in rent. What is the NOI?
A$18,000
B$10,200
C$3,000✓ Correct
D$15,600
Explanation
NOI = Gross Income - Operating Expenses. Operating expenses = taxes ($2,400) + insurance ($1,800) + maintenance ($3,600) = $7,800. Note: Mortgage payments (debt service) are NOT operating expenses for NOI calculation. NOI = $18,000 - $7,800 = $10,200. This is a critical distinction — NOI excludes debt service and income taxes. Cash flow before taxes = NOI - mortgage payments = $10,200 - $7,200 = $3,000.
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