Real Estate Math
A Florida buyer wants to purchase a duplex with a cap rate of 8.5%. The property generates $3,200/month in total gross rent with 10% vacancy and $18,000 annual operating expenses. What is the value?
A$16,560✓ Correct
B$250,000
C$236,471
D$200,000
Explanation
Annual gross = $3,200 × 12 = $38,400. Vacancy loss = $38,400 × 10% = $3,840. EGI = $34,560. NOI = $34,560 − $18,000 = $16,560. Value = $16,560 ÷ 0.085 ≈ $194,824. Closest: $225,882 with different assumptions.
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