A South Dakota property has an annual gross income of $48,000 and operating expenses of $18,000. What is the net operating income (NOI)?
Correct Answer
B) $30,000
NOI = Gross income - Operating expenses = $48,000 - $18,000 = $30,000. Note that debt service (mortgage payments) is NOT included in operating expenses when calculating NOI.
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Related Topics & Key Terms
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Related Concepts
Proration is the process of dividing expenses or income between the buyer and seller at the closing of a real estate transaction. This ensures each party pays or receives only their fair share based on the period of ownership.
Proration calculations divide shared expenses such as property taxes, insurance, HOA dues, and rent between buyer and seller at closing based on the number of days each party owns the property.
Transfer tax is a tax imposed on the transfer of real property ownership, typically calculated based on the sale price and paid at closing. It is commonly expressed as a rate per $100, $500, or $1,000 of the sale price.
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