Real Estate Math
A Wisconsin 6-unit apartment building generates $2,200/month per unit. The annual operating expenses are $52,000. What is the annual NOI?
A$106,400✓ Correct
B$110,400
C$114,400
D$116,400
Explanation
Annual gross income = 6 × $2,200 × 12 = $158,400. NOI = $158,400 - $52,000 = $106,400.
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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.
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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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