The capitalization rate for a property is found by dividing:
Why Net Operating Income by Value (or Sale Price) Is Correct
Answer B: Net Operating Income by Value (or Sale Price)
Exam Tip: Real Estate Math
Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.
People Also Study
Related Arizona Questions
- An Arizona property produces a Net Operating Income (NOI) of $120,000 per year. Using a capitalization rate of 6%, what is the estimated value?Property Valuation
- In the income approach, a property generates $36,000 annual net operating income (NOI). If the capitalization rate is 6%, what is the estimated value?Property Valuation
- A property generates $60,000 in annual net operating income. If the prevailing cap rate is 6%, what is the estimated value?Property Valuation
- An Arizona property has annual gross income of $96,000, vacancies of 8%, and operating expenses of $32,000. If the cap rate is 7%, what is the value?Real Estate Math
- An Arizona appraiser using the income approach to value a commercial property calculates a capitalization rate of 7%. If the net operating income (NOI) is $105,000, what is the estimated property value?Property Valuation
- A property's net operating income (NOI) is $48,000 and the cap rate is 8%. What is the estimated property value using the income approach?Real Estate Math
- A property has a gross annual income of $120,000, a vacancy rate of 5%, and operating expenses of $40,000. What is the net operating income (NOI)?Real Estate Math
- An Arizona property has a potential gross income of $108,000, a 6% vacancy rate, and $36,000 in operating expenses. If properties in the area sell at a 7.5% cap rate, what is the estimated value?Real Estate Math
Key Terms to Know
A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Math Concepts
Study This Topic
Practice More Arizona Real Estate Questions
1,400+ questions covering all exam topics. Start free — no signup required.
Take the Free Arizona Quiz →