Real Estate Math
A Kentucky investor buys a property for $500,000. Operating expenses are $40,000/year and gross income is $70,000/year. What is the operating expense ratio?
A42.9%
B57.1%✓ Correct
C66.7%
D80%
Explanation
Operating Expense Ratio = Operating Expenses ÷ Gross Income = $40,000 ÷ $70,000 = 57.1%. Using the values given ($500,000, $40,000), apply the appropriate formula.. The correct answer is 57.1%.. This is a common calculation on the Kentucky real estate exam.
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