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?
Correct Answer
B) $40,000
Step 1: Effective gross income = $72,000 − $7,200 = $64,800. Step 2: NOI = $64,800 − $24,800 = $40,000. NOI is the income remaining after vacancy and operating expenses, but before debt service and income taxes.
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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?
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