Real Estate Math
A rental property has a gross annual income of $54,000, operating expenses of $18,000, and annual debt service (mortgage) of $24,000. What is the annual cash flow before taxes?
A$6,000
B$12,000✓ Correct
C$18,000
D$36,000
Explanation
NOI = $54,000 − $18,000 = $36,000. Cash flow before taxes = NOI − Debt service = $36,000 − $24,000 = $12,000.
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