Property Management
What is 'expense ratio' in Delaware investment property analysis?
AThe ratio of commission expenses to total revenue
BOperating expenses as a percentage of effective gross income, indicating the efficiency of property operations✓ Correct
CThe ratio of capital expenses to operating expenses
DThe percentage of expenses paid by tenants in NNN leases
Explanation
Expense ratio = Operating Expenses ÷ Effective Gross Income. A lower expense ratio indicates more efficient operations and a higher proportion of income available as net operating income.
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Key Terms to Know
Earnest Money
A deposit made by the buyer when submitting a purchase offer, demonstrating serious intent and serving as consideration for the contract.
ContingencyA condition in a purchase contract that must be satisfied before the sale can proceed to closing.
Purchase AgreementA legally binding contract between a buyer and seller that outlines the terms and conditions of a real estate sale.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
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