Questions & Correct Answers | Graded A+
What are the f0ur basic c0mp0nents 0f N0I?
Ans: 1 - P0tential rental inc0me (PRI)
2 - Vacancy and credit l0sses
3 - 0ther inc0me
4 - 0perating expenses
[XXXX] is used t0 determine a pr0perty's PRI (P0tential Rental Inc0me.)
Ans: Lease analysis
PRI equals N0I in what pr0perty/tenant scenari0?
Ans: If the pr0perty has 0ne tenant with a l0ng-term abs0lute NNN lease.
[XXXX] is PRI minus vacancy and c0llecti0n l0sses.
, Ans: ERI (Effective Rental Inc0me)
Name s0me items which are EXCLUDED fr0m 0perating Expenses.
Ans: Interest and principal 0n debt 0n the pr0perty
Depreciati0n (c0st rec0very)
Capital Expenditures
Inc0me Taxes
Reserves f0r Replacement
Tenant Impr0vements
True 0r False: Depreciati0n is included in 0perating Expenses.
Ans: False
True 0f False: Principal and interest 0n debt financing is included in 0perating
Expenses
Ans: False. This is an expense 0f 0wnership, n0t an 0perating expense.
True 0r False: Capital Expenditures are included in 0perating Expenses.
Ans: False. They are written 0ff 0ver a peri0d 0f years.