Real Estate Math
A building has 8 units all renting at $850/month. The vacancy rate is 8%. Annual operating expenses are $30,000. What is the NOI?
A$45,072✓ Correct
B$58,720
C$81,600
D$30,000
Explanation
Gross income = 8 × $850 × 12 = $81,600. Vacancy = $81,600 × 8% = $6,528. EGI = $81,600 − $6,528 = $75,072. NOI = $75,072 − $30,000 = $45,072. Reconsidering: With 8 units at $850 and 8% vacancy, EGI = $81,600 × 0.92 = $75,072; NOI = $75,072 − $30,000 = $45,072. Given the options, the correct calculation yields $45,072. This question tests the method: EGI minus expenses.
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