A property's annual NOI is $48,000 and it sold at an 8% cap rate. What was the sale price?
Why $600,000 Is Correct
Answer B: $600,000
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 California Questions
- A property sold for $680,000. The California county documentary transfer tax is $0.55 per $500 of the sale price. What is the transfer tax owed?Real Estate Math
- A property has an assessed value of $420,000. California's Proposition 13 limits the property tax rate to 1% of assessed value. What is the base annual property tax?Real Estate Math
- A property is assessed at $340,000. The tax rate is $12 per $1,000 of assessed value. What are the annual property taxes?Real Estate Math
- A house is purchased in California for $750,000. Under Prop 13, the base property tax rate is 1%. What is the maximum annual base property tax?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.
Net Operating Income (NOI)The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.
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.
Math Concepts
Study This Topic
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →