Real Estate Math
An investor buys a Connecticut rental property for $390,000 and expects annual net operating income of $27,300. What is the capitalization rate?
A6.5%
B7.0%✓ Correct
C7.5%
D8.0%
Explanation
Cap rate = NOI ÷ Value = $27,300 ÷ $390,000 = 0.07 = 7.0%. Using the values given ($390,000, $27,300), apply the appropriate formula.. The correct answer is 7.0%.. This is a common calculation on the Connecticut real estate exam.
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