Question

If a corporate building has nine office suites that rents for $14,800 per month each, but suffers from a 14% vacancy rate and annual expenses of $21,100, what is the NOI of the building

Answer 1

=$1,353, 524

Step-by-step explanation:

NOI stands for net operating income

In this case, NOI will be calculated as follows

Rent per suit = $14,800

Number of suits 9

The monthly rent will be

=$14,800 x 9

=$133,200

Annual rent will be monthly rent x 12

= $133,200 x 12

=$1,598,400

Considering a 14 % vacancy rate, expected annual rent collection

=$1, 598,400 minus 14% of $1, 598,400 or 86% of $1, 598,400

= 86/100 x $1, 598,400

=$1,374,624

Adjusting for annual expenses

= $1,374,624 - $21,100

=$1,353, 524