A retail property generates $200,000 in gross rental income annually. Operating expenses are $75,000, and debt service is $90,000. What is the Net Operating Income (NOI)?
Correct Answer
A) $125,000
NOI is income minus operating expenses; debt service is not deducted because it reflects how the property is financed, not how it operates. NOI = $200,000 - $75,000 = $125,000.
Why This Is the Correct Answer
Gross rental income of $200,000 minus operating expenses of $75,000 equals an NOI of $125,000. The $90,000 of debt service is a financing cost and is excluded from NOI.
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A BC landlord wants to end a commercial lease early to carry out major renovations. What determines whether the landlord can do so?
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A retail shopping center tenant has a percentage lease with 3% of gross sales above $500,000 annually, plus base rent of $8,000 monthly. If the tenant's annual gross sales are $750,000, what is their total annual rent payment?