Real Estate Math
A Connecticut investor purchases an apartment building for $750,000. Annual NOI is $52,500. The investor expects the property to appreciate 3% per year. What is the total return (cap rate + appreciation) in the first year?
A7%
B10%✓ Correct
C11%
D13%
Explanation
Cap rate = $52,500 ÷ $750,000 = 7%. Appreciation = 3%. Total return = 7% + 3% = 10%. To solve this, multiply the relevant values: $750,000 and $52,500 at 3%.. The correct answer is 10%.. This is a common calculation on the Connecticut real estate exam.
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