Property Management
The 'operating expense ratio' (OER) for a NJ income property is calculated as:
AOperating Expenses ÷ Purchase Price
BOperating Expenses ÷ Effective Gross Income✓ Correct
CNOI ÷ Effective Gross Income
DDebt Service ÷ NOI
Explanation
OER = Operating Expenses ÷ Effective Gross Income. It measures what percentage of effective gross income is consumed by operating expenses, excluding debt service.
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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.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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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