Property Valuation
An appraiser in NJ using the income approach for a 10-unit apartment complex would calculate the NOI by:
AAdding all rents collected and subtracting nothing
BSubtracting vacancy, credit losses, and all operating expenses from gross potential income✓ Correct
CMultiplying the gross rent by the cap rate
DDividing the sales price by the number of units
Explanation
NOI = Gross Potential Income – Vacancy & Credit Loss + Other Income – Operating Expenses (excluding debt service). Debt service is NOT included in operating expenses for NOI calculation.
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