Real Estate Math

A Florida property is purchased for $640,000. First year NOI is $51,200. What is the overall capitalization rate?

A8%✓ Correct
B7.5%
C8.5%
D10%

Explanation

Cap rate = NOI ÷ Purchase Price = $51,200 ÷ $640,000 = 0.08 = 8%.

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