Real Estate Math
A Massachusetts investment property generates 5% vacancy on a potential gross income of $180,000. Annual operating expenses are 38% of effective gross income. What is the NOI?
A$106,110✓ Correct
B$111,600
C$68,400
D$180,000
Explanation
EGI = $180,000 × (1 − 0.05) = $171,000.
People Also Study
Related Massachusetts Questions
- A property has annual gross income of $96,000, vacancy loss of 5%, and operating expenses of $38,000. What is the Net Operating Income (NOI)?Real Estate Math
- A Massachusetts property has an annual gross income of $54,000, a vacancy rate of 8%, and operating expenses of $22,500. What is the capitalization rate if the property's value is $450,000?Real Estate Math
- A 6-unit building has monthly gross rents of $1,650 per unit. Vacancy is 5% and operating expenses are $52,000 annually. What is the annual NOI?Real Estate Math
- A Massachusetts investment property generates an annual gross rent of $96,000. Operating expenses are 40% of gross rent. If the cap rate is 8%, what is the estimated value?Real Estate Math
- A Massachusetts property's effective gross income is calculated as:Property Valuation
- In the income approach, 'effective gross income' differs from 'potential gross income' by:Property Valuation
- A property generates $72,000 in net operating income. Comparable properties in the market have a 7.2% cap rate. What is the estimated value?Property Valuation
- Which of the following expenses is typically NOT included in calculating a property's Net Operating Income (NOI)?Property Management
Key Terms to Know
Net Operating Income (NOI)
The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
Study This Topic
Practice More Massachusetts Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Massachusetts Quiz →