Real Estate Math
An investor purchases a four-unit building for $480,000. Each unit rents for $1,200/month. The annual operating expense ratio is 42%. What is the annual cap rate?
A7.0%✓ Correct
B8.0%
C6.9%
D9.0%
Explanation
Annual gross income = 4 × $1,200 × 12 = $57,600. NOI = $57,600 × (1 − 0.
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