You are considering whether you should purchase a rental property that you estimate to have a gross potential income of $93,000 per year. You expect the operating costs to be $39,000 per year. What is the NOI if the occupancy rate is expected to be 90%?
A)$44,700
B)$46,392
C)$47,933
D)$54,000
E)$93,000

Question

Quizplus · Accepted Answer

The Net Operating Income (NOI) is calculated by taking the gross potential income, adjusting for the occupancy rate, and then subtracting the operating costs. Here, the gross potential income is $93,000, and with a 90% occupancy rate, the effective gross income is $93,000 * 0.9 = $83,700. Subtracting the operating costs of $39,000 gives an NOI of $83,700 - $39,000 = $44,700.

You Are Considering Whether You Should Purchase a Rental Property