Real Estate Math
A Nebraska investor buys a $300,000 property with a 25% down payment. The annual return on equity if NOI is $24,000 and annual debt service is $15,000 is:
A8%
B12%✓ Correct
C16%
D20%
Explanation
Equity = 25% × $300,000 = $75,000. Cash flow = NOI − Debt Service = $24,000 − $15,000 = $9,000.
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