Use the information to answer questions 23 and 24 below: Suppose an apartment complex sold with a cap rate of 10%. It sold with a Gross Income Multiplier of 5. No vacancies are expected. (Make up imaginary income statement to assist. This is a gift, take a deep breath.)
1. What is its operating expense ratio?
a) 5%
b) 50%
c) 25%
d) 75%
e) 15%
2. If the debt service for this property is equal to its operating expenses, what is the property’s break even ratio?
a) 10%
b) 100%
c) 50%
d) 150%
e) 30%