A commercial property generates $120,000 in annual rental income and has operating expenses of $30,000. What is the Net Operating Income (NOI)?
Correct Answer
B) $90,000
Net Operating Income (NOI) is calculated by subtracting operating expenses from gross rental income: $120,000 - $30,000 = $90,000. NOI is a key metric used in commercial real estate valuation and investment analysis.
Why This Is the Correct Answer
Option B ($90,000) is correct because NOI is calculated by subtracting operating expenses from gross rental income. The formula is: NOI = Gross Rental Income - Operating Expenses. In this case: $120,000 (annual rental income) - $30,000 (operating expenses) = $90,000. This calculation follows standard commercial real estate analysis principles used across Canadian provinces and is essential for property valuation and investment analysis under commercial real estate practices.
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A commercial property generates $120,000 in annual rental income and has operating expenses of $35,000. If the capitalization rate is 8%, what is the estimated property value?
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A commercial property generates $120,000 in annual rental income with operating expenses of $30,000. If the capitalization rate is 8%, what is the estimated property value?