Real Estate Math
A Connecticut apartment building has 12 units. 10 units rent for $1,600/month and 2 units rent for $1,850/month. The vacancy rate is 8%. Annual operating expenses are $52,000. What is the NOI?
A$159,456
B$165,488✓ Correct
C$129,456
D$148,000
Explanation
Annual PGI = (10 × $1,600 + 2 × $1,850) × 12 = ($16,000 + $3,700) × 12 = $19,700 × 12 = $236,400. EGI = $236,400 × (1 - 0.08) = $236,400 × 0.92 = $217,488.92 = $217,488. NOI = $217,488 - $52,000 = $165,488. EGI = $236,400 × 0.92 = $217,488. NOI = $217,488 - $52,000 = $165,488.
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