Real Estate Math
A tenant-occupied property generates $3,200/month rent. Annual vacancy is 5% and expenses are $12,000/year. What is the annual NOI?
A$24,480✓ Correct
B$20,600
C$25,440
D$21,000
Explanation
Annual gross income = $3,200 × 12 = $38,400. Vacancy loss = $38,400 × 5% = $1,920.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Math Concepts
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