Real Estate Math
An Allentown duplex has annual gross rent of $28,800, operating expenses of $9,500, and a mortgage payment of $12,000/year. What is the cash flow before taxes?
A$7,300✓ Correct
B$19,300
C$16,800
D$28,800
Explanation
Cash flow = Gross Rent − Operating Expenses − Mortgage Payment = $28,800 − $9,500 − $12,000 = $7,300. Cash flow before taxes measures what the investor actually pockets after paying expenses and debt service. NOI ($19,300) is before debt service; cash flow is after.
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