Real Estate Math
A 4-unit building rents for $1,100/month per unit. The cap rate is 7% and NOI represents 65% of gross income. What is the approximate property value?
A$27,420✓ Correct
B$374,000
C$420,000
D$308,880
Explanation
Annual gross = 4 × $1,100 × 12 = $52,800. Applying expense/vacancy adjustments, NOI ≈ $27,420.
People Also Study
Related Arkansas Questions
- A property rents for $1,200 per month. The annual vacancy rate is 5%. What is the effective gross income?Real Estate Math
- An apartment building has 8 units, each renting for $850 per month. Vacancy rate is 8%. What is the annual effective gross income?Real Estate Math
- A building has 8,000 square feet of rentable space. The monthly rent is $12 per square foot per year. What is the annual gross income?Real Estate Math
- A property has a potential gross income of $120,000 annually, with a 6% vacancy rate and $30,000 in operating expenses. What is the NOI?Real Estate Math
- A property generates a net operating income of $30,000 per year. Using a capitalization rate of 6%, what is the indicated value?Property Valuation
- When using the income approach, potential gross income minus vacancy and credit losses equals:Property Valuation
- An income property has an NOI of $50,000 and the market cap rate is 7.5%. What is the estimated value?Property Valuation
Key Terms to Know
Capitalization Rate (Cap Rate)
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.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
Study This Topic
Practice More Arkansas Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Arkansas Quiz →