NYS Salesperson Practice Exam
Commercial Math Quiz
Question 1: The Small Apartment Building
8 units @ $1,200/mo. Vacancy: 4%. Expenses: Taxes $6,000, Insurance $3,000, Utilities $4,800, Maintenance $7,200.
8 units @ $1,200/mo. Vacancy: 4%. Expenses: Taxes $6,000, Insurance $3,000, Utilities $4,800, Maintenance $7,200.
1. What is the Net Operating Income (NOI)?
Explanation: Potential Gross Income (8 * 1200 * 12) = $115,200.
Subtract 4% Vacancy ($4,608) = Effective Gross Income of $110,592.
Subtract Total Expenses ($21,000) = $89,592 NOI.
Subtract 4% Vacancy ($4,608) = Effective Gross Income of $110,592.
Subtract Total Expenses ($21,000) = $89,592 NOI.
2. If valued at $800,000, what is the capitalization rate (cap rate)?
Explanation: Cap Rate = NOI ÷ Value.
$89,592 ÷ $800,000 = 0.11199... or 11.20%.
$89,592 ÷ $800,000 = 0.11199... or 11.20%.
Question 2: The Retail Strip Mall
Annual Gross: $150,000. Vacancy: 1 unit for 3 months @ $2,500/mo. Expenses: $18k Taxes, $12k Insurance, $15k CAM, $6k Management.
Annual Gross: $150,000. Vacancy: 1 unit for 3 months @ $2,500/mo. Expenses: $18k Taxes, $12k Insurance, $15k CAM, $6k Management.
1. What is the Net Operating Income (NOI)?
Explanation: Vacancy Loss = 3 months * $2,500 = $7,500.
Effective Gross Income = $150,000 - $7,500 = $142,500.
Total Expenses = $51,000.
NOI = $142,500 - $51,000 = $91,500.
Effective Gross Income = $150,000 - $7,500 = $142,500.
Total Expenses = $51,000.
NOI = $142,500 - $51,000 = $91,500.
2. What is the cap rate if the property sold for $1,200,000?
Explanation: $91,500 ÷ $1,200,000 = 0.07625 or 7.63%.
Question 3: The Office Building
20,000 sq ft. Base Rent: $20/sq ft. Occupancy: 85%. Expenses: $6/sq ft.
20,000 sq ft. Base Rent: $20/sq ft. Occupancy: 85%. Expenses: $6/sq ft.
1. What is the Net Operating Income (NOI)?
Explanation: Potential Gross = 20,000 * $20 = $400,000.
Effective Gross (85% Occupied) = $400,000 * 0.85 = $340,000.
Total Expenses = 20,000 * $6 = $120,000.
NOI = $340,000 - $120,000 = $220,000.
Effective Gross (85% Occupied) = $400,000 * 0.85 = $340,000.
Total Expenses = 20,000 * $6 = $120,000.
NOI = $340,000 - $120,000 = $220,000.
2. With a value of $2,000,000, what is the cap rate?
Explanation: $220,000 ÷ $2,000,000 = 0.11 or 11.0%.
Question 4: The Single-Family Rental
Rent: $2,000/mo. Vacancy: 5%. Taxes: $4,000, Insurance: $1,500, Repairs: $2,000.
Rent: $2,000/mo. Vacancy: 5%. Taxes: $4,000, Insurance: $1,500, Repairs: $2,000.
1. What is the Net Operating Income (NOI)?
Explanation: Gross Rent = $24,000. Vacancy (5%) = $1,200.
Effective Income = $22,800. Expenses = $7,500.
NOI = $22,800 - $7,500 = $15,300.
Effective Income = $22,800. Expenses = $7,500.
NOI = $22,800 - $7,500 = $15,300.
Question 5: The Warehouse
50,000 sq ft @ $8/sq ft. Landlord pays $100k (Taxes/Ins). Tenant pays all other expenses.
50,000 sq ft @ $8/sq ft. Landlord pays $100k (Taxes/Ins). Tenant pays all other expenses.
1. What is the Net Operating Income (NOI)?
Explanation: Gross Income = 50,000 * $8 = $400,000.
Subtract Landlord's Expenses ($100,000) = $300,000 NOI.
Subtract Landlord's Expenses ($100,000) = $300,000 NOI.
Question 8: Determining Value
Market Cap Rate: 7%. NOI: $100,000.
Market Cap Rate: 7%. NOI: $100,000.
1. What is the estimated market value?
Explanation: Value = NOI ÷ Cap Rate.
$100,000 ÷ 0.07 = $1,428,571.
$100,000 ÷ 0.07 = $1,428,571.