A property generates $60,000 in annual net operating income. If the cap rate is 8%, what is the property's estimated value?
Why $750,000 Is Correct
Answer B: $750,000
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
People Also Study
Related Alabama Questions
- An Alabama property has a net operating income of $45,000 and a cap rate of 7.5%. What is the property's value?Real Estate Math
- A property's net operating income is $36,000 annually. If the cap rate is 8%, what is the property's estimated value?Real Estate Math
- A building has a net operating income of $45,000. If the cap rate is 9%, what is the estimated value?Real Estate Math
- A property has an annual net operating income of $72,000. The capitalization rate is 8%. What is the estimated property value?Real Estate Math
- A property has an annual gross income of $84,000, a vacancy rate of 5%, and operating expenses of $28,000. What is the NOI?Property Valuation
- An Alabama appraiser uses the income approach to value a rental property. The key formula is:Property Valuation
- An appraiser applies a 7% cap rate to a NOI of $42,000. What is the estimated property value?Property Valuation
- An appraiser using the income approach divides the net operating income by the capitalization rate to determine:Property Valuation
Key Terms to Know
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Math Concepts
Study This Topic
Practice More Alabama Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Alabama Quiz →