Property Valuation
Net operating income (NOI) in real estate appraisal is income:
AAfter all taxes and mortgage payments
BAfter all operating expenses but before debt service (mortgage payments) and income taxes✓ Correct
CBefore all expenses
DAfter all expenses including capital improvements
Explanation
NOI = Effective Gross Income - Operating Expenses. It is calculated before mortgage payments (debt service) and income taxes.
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Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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