Real Estate Math
An investor purchases a rental property for $500,000. The annual NOI is $45,000. What is the cap rate?
A7%
B8%
C9%✓ Correct
D10%
Explanation
Cap Rate = NOI ÷ Purchase Price = $45,000 ÷ $500,000 = 0.09 = 9%. Using the values given ($500,000, $45,000), apply the appropriate formula.. The correct answer is 9%.. This is a common calculation on the Arkansas real estate exam.
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