Real Estate Math
A Florida investor purchases a 6-unit apartment building for $720,000. Each unit rents for $1,100/month. Annual operating expenses are $18,000. The cap rate is approximately:
A8.5%✓ Correct
B9.15%
C7.5%
D10%
Explanation
Annual gross = 6 × $1,100 × 12 = $79,200. NOI = $79,200 − $18,000 = $61,200. Cap rate = NOI ÷ Price = $61,200 ÷ $720,000 = 8.5%.
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