Property Valuation
Net operating income (NOI) for an investment property is calculated as:
AGross potential income − vacancy/credit loss − operating expenses✓ Correct
BGross rent collected − mortgage payments
CEffective gross income − capital expenditures
DGross rent × cap rate
Explanation
NOI = Gross Potential Income − Vacancy and Credit Losses = Effective Gross Income − Operating Expenses. Mortgage payments (debt service) are NOT subtracted from NOI.
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