Approaches to value
Net operating income (NOI)
Effective gross income less operating expenses, before debt service
Deliberately excludes mortgage payments, depreciation and income tax, because those belong to a particular owner’s financing and tax position rather than to the property. That exclusion is exactly what makes NOI comparable between buildings.
How the exam asks about it
A question that includes a mortgage payment in the expense list is testing whether you subtract it. You do not.
Related terms
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