Question

Tom owns an office building with 10,000 square feet of office space. Annual rent is $60 per square foot. The building currently has 88% occupancy (ie 12% vacancy). If the operating expenses are 30% of Effective Gross Income, what is the Net Operating Income (NOI)?

Answer 1

Answer:

$1,160,000

Explanation:

Assuming that only operating expenses in given question is Annual Rent.

Effective Gross income=(60*10,0000)/30%=2,000,000

Since the occupancy rate is 88%, therefore the effective gross income will be 2,000,000*88%=1,760,000

Net Operating income=Effective gross income-operating expenses

                                     =1,760,000-(60*10,000)

                                     =1,760,000-600,000

                                     =$1,160,000