Real Estate Math
A New York property's annual gross income is $85,000, operating expenses are $32,000, and the debt service (mortgage payments) is $28,000. What is the Net Operating Income (NOI)?
A$25,000
B$53,000✓ Correct
C$57,000
D$85,000
Explanation
NOI = Gross Income - Operating Expenses (NOT including debt service). NOI = $85,000 - $32,000 = $53,000. Debt service is not deducted when calculating NOI; it is deducted below the line to calculate cash flow before taxes.
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