Real Estate Math
An investor buys a rental property for $800,000. Annual gross rent is $72,000 and operating expenses are $24,000. What is the capitalization rate?
A3%
B6%✓ Correct
C9%
D12%
Explanation
NOI = Gross Rent − Operating Expenses = $72,000 − $24,000 = $48,000. Cap Rate = NOI ÷ Purchase Price = $48,000 ÷ $800,000 = 0.06 = 6%.
Related California Real Estate Math Questions
- A buyer's gross monthly income is $7,500. Lender's maximum housing-expense ratio is 28%. What is the maximum monthly PITI payment?
- A property is purchased for $550,000 with a 20% down payment. The loan origination fee is 1 point. How much is the origination fee?
- A buyer obtains a $400,000 loan at 6% annual interest. What is the monthly interest charge for the first month (interest-only calculation)?
- An investor purchases a fourplex for $800,000. The property generates $6,000/month in gross rents. What is the Gross Rent Multiplier (GRM)?
- A salesperson sells a home for $540,000. The total commission is 6%, split evenly between the listing and selling brokers. The listing salesperson receives 60% of their broker's side. How much does the listing salesperson earn?
- A property's NOI is $54,000 per year. A comparable property recently sold at a 7.5% cap rate. Using the income approach, what is this property's estimated value?
- An agent earns a 2.5% commission on a $560,000 sale. What is their commission?
- A buyer purchases a property for $475,000 with a 10% down payment. The lender charges 2 discount points. How much are the discount points in dollars?
Practice More California Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free California Quiz →