Real Estate Math
A NJ property generates annual NOI of $45,000 after deducting operating expenses. Annual debt service (mortgage payments) is $28,000. What is the annual cash flow before taxes?
A$73,000
B$17,000✓ Correct
C$45,000
D$28,000
Explanation
Cash flow before taxes = NOI – Debt Service = $45,000 – $28,000 = $17,000. This represents the equity return to the investor after paying operating expenses and mortgage obligations.
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