Lesson 10

Question 1

NOI Calculation

Answer 1

Potential Gross Income - Vacancy and Collection Loss = Effective Gross Income - Operating Expenses = Net Operating Income

Question 2

Potential Gross Income

Answer 2

The total revenue attributable to real property at full occupancy, before vacancy and operating expenses are deducted

Question 3

Vacancy Loss

Answer 3

An expected loss in income as a result of periodic vacant space attributed to unrented space and tenant turnover

Question 4

Collection Loss

Answer 4

Considers non-payment of rent and can consider units rented at below-market rates

Question 5

Effective Gross Income

Answer 5

The anticipated income from all operations of the real property, after a deduction is made to the potential gross income for vacancy and collection loss

Question 6

Operating Expenses

Answer 6

Periodic expenditures necessary to maintain the real property and continue production of the effective gross income, assuming prudent and competent management

Question 7

Net Operating Income excludes consideration of

Answer 7

Depreciation, capital cost allowance, income tax, debt repayment