Reference no: EM132472175

Question : Consider a residential property with the following characteristics:

Point 1: The building has 300 units.

Point 2: Each unit is rented out an at effective gross income of $1300 per month (effective rent per suite).

Point 3: Variable expenses per unit = $410 per month.

Point 4: Fixed expenses (for whole property) = $87000 per month

Point 5: The ratio of variable expenses to fixed expenses is constant for each unit and over time.

Question 2: Assuming n= 215 units and DOL = 1.83, which of the following statements is TRUE?

A. A 1% increase in occupancy beyond 215 units triggers a 1.83% increase in net operating income.

B. Each additional occupied unit beyond 215 units triggers a 1.83% increase in variable operating expenses.

C. A 1.83% increase in occupancy beyond 215 units leads to a 1% increase in net operating income.

D. A 1% decrease in occupancy beyond 215 units triggers a 1.83% decrease in total expenses.

Please explain.