Real Estate Math

A 10-unit apartment complex generates $125,000 in annual NOI. The buyer pays $1,250,000. What is the overall cap rate?

A8%
B9%
C10%✓ Correct
D11%

Explanation

Cap rate = NOI ÷ Value = $125,000 ÷ $1,250,000 = 0.10 = 10%.

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