A 6-unit apartment building has a gross potential income of $5,400/month. If vacancy is 6%, what is the annual effective gross income?
Why $60,912 Is Correct
Answer A: $60,912
Exam Tip: Real Estate Math
Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.
People Also Study
Related Alabama Questions
- A building has a gross annual income of $120,000, vacancy and collection loss of 8%, and operating expenses of $35,000. What is the net operating income (NOI)?Real Estate Math
- A building has a gross annual income of $96,000, vacancy loss of 5%, and operating expenses of $28,000. What is the net operating income (NOI)?Real Estate Math
- A building has 12 units renting at $750/month each. The vacancy rate is 5%. What is the annual effective gross income?Real Estate Math
- When calculating net operating income for an apartment building, which of the following is deducted from effective gross income?Property Management
- A 10-unit apartment building has all units renting at $925/month. The gross rent multiplier is 8 (annual). What is the estimated value?Real Estate Math
- A property has an annual gross income of $84,000, a vacancy rate of 5%, and operating expenses of $28,000. What is the NOI?Property Valuation
- A property manager reports the following: Gross potential income $120,000; Vacancy 5%; Operating expenses $40,000. What is the NOI?Property Valuation
- Effective gross income (EGI) for an investment property is calculated as:Property Valuation
Key Terms to Know
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →