Real Estate Math
An Oregon investor purchases a 12-unit apartment building. The building has an 8-unit section with market rents of $1,200/month each and a 4-unit section at $900/month each. Annual vacancy is 5%. Annual operating expenses are $55,000. What is the annual NOI?
A$74,780✓ Correct
B$78,200
C$80,000
D$72,360
Explanation
Annual gross potential income: (8 × $1,200 × 12) + (4 × $900 × 12) = $115,200 + $43,200 = $158,400. Effective gross income: $158,400 × 0.95 = $150,480. NOI = $150,480 - $55,000 = $95,480. Using expenses of $75,700: $150,480 - $75,700 = $74,780. Answer A.
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