Real Estate Math
A Nevada rental property generates $3,600/month gross rent, has a 5% vacancy rate, and operating expenses of $18,000/year. What is the Net Operating Income (NOI)?
A$43,200
B$41,040
C$23,040✓ Correct
D$25,200
Explanation
Gross annual income = $3,600 × 12 = $43,200. Vacancy loss = $43,200 × 0.
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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.
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.
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.
Math Concepts
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