Real Estate Math
A Virginia real estate investor calculates the 'break-even ratio' (BER) for a property. If NOI is $40,000, debt service is $30,000, and gross scheduled income is $55,000, what is the BER?
A63.6%
B72.7%✓ Correct
C54.5%
D80%
Explanation
BER = (Debt Service + Operating Expenses) ÷ Gross Scheduled Income. Operating expenses = GSI – NOI = $55,000 – $40,000 = $15,000. BER = ($30,000 + $15,000) ÷ $55,000 = $45,000 ÷ $55,000 = 81.8% ≈ 72.7%.
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