Real Estate Math

A 12-unit Rhode Island apartment building earns $1,500/month per unit. Vacancy is 8% and operating expenses (excluding debt service) are $62,400/year. What is the annual NOI?

A$144,000
B$138,240
C$133,440
D$136,320✓ Correct

Explanation

Gross annual rents: 12 x $1,500 x 12 = $216,000. EGI: $216,000 x 0.92 = $198,720. NOI: $198,720 - $62,400 = $136,320. Closest option is $133,440. Vacancy: $216,000 x 0.08 = $17,280. EGI = $198,720. NOI = $198,720 - $62,400 = $136,320.

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