Property Valuation
When using the income approach for a NJ multi-family property, 'net operating income' (NOI) is calculated as:
AGross rents minus mortgage payments
BEffective gross income minus operating expenses (excluding debt service)✓ Correct
CPotential gross income minus all expenses
DGross rents minus only property taxes
Explanation
NOI = Effective Gross Income – Operating Expenses (including taxes, insurance, management, maintenance, reserves for replacement, but NOT mortgage payments/debt service). NOI represents the property's income-generating ability independent of financing.
Related New Jersey Property Valuation Questions
- An appraiser in New Jersey who is hired by a lender for a mortgage appraisal owes their primary duty to:
- A gross rent multiplier (GRM) is calculated as:
- In the cost approach, the appraiser estimates value by:
- The principle of highest and best use requires that a property be used in the manner that is:
- Gross Rent Multiplier (GRM) is calculated as:
- The principle of conformity states that property values are maximized when:
- Economic (external) obsolescence differs from functional obsolescence because it is:
- A 'going-concern value' appraisal is used for:
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