In June 2026, investor Maya Chen reviews the annual operating statement for Pine Court to estimate NOI before capitalization. Which item is treated as debt service rather than an operating expense?
Correct Answer
B) Principal and interest on the owner's mortgage
Mortgage principal and interest are debt service, not operating expenses. NOI is intended to reflect the property's operating performance before financing choices are considered, so mortgage payments are kept below the NOI line.
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Previous Question
In May 2026, appraiser Devon Price analyzes a comparable three-unit property that sold for $750,000. Market rent data show each unit should rent for $3,000 per month. Rounded to two decimals, what gross rent multiplier does the sale indicate?
Next Question
In July 2026, broker Priya Shah is analyzing Garden Square, a small rental property. Potential gross income is $72,000 per year, vacancy and collection loss is estimated at $7,200, and annual operating expenses are $24,800. What is the property's NOI?