Real Estate Math

A New York apartment building has 10 units, each renting for $2,200 per month. The vacancy rate is 5%. What is the effective gross income (EGI) on an annual basis?

A$250,800✓ Correct
B$251,900
C$264,000
D$277,200

Explanation

Potential gross income = 10 units x $2,200 x 12 = $264,000. Vacancy loss = $264,000 x 0.05 = $13,200. EGI = $264,000 minus $13,200 = $250,800.

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