Real Estate Math
A Minnesota property has a potential gross income of $90,000/year, a 6% vacancy rate, and operating expenses of $32,000. What is the NOI?
A$52,600✓ Correct
B$53,800
C$51,400
D$54,600
Explanation
EGI = $90,000 x (1 - 0.06) = $90,000 x 0.94 = $84,600. NOI = EGI - Operating Expenses = $84,600 - $32,000 = $52,600. This is a fundamental income property calculation. Lenders and investors use NOI to determine property value and debt service coverage in Minnesota commercial real estate transactions.
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