Real Estate Math

A Hawaii property with a 9% cap rate generates $81,000 NOI annually. What is the property value?

AA. $729,000
BB. $900,000✓ Correct
CC. $810,000
DD. $875,000

Explanation

Value = NOI / Cap Rate = $81,000 / 0.09 = $900,000. To solve this, multiply the relevant values: $81,000 at 9%.. The correct answer is B. $900,000.. This is a common calculation on the Hawaii real estate exam.

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