Real Estate Math
A Kansas commercial property has an NOI of $96,000. The building value is $800,000 and land value is $200,000. Using a building cap rate of 10% and land cap rate of 8%, what is the overall cap rate?
A9%
B9.6%✓ Correct
C10%
D8%
Explanation
Total value = $1,000,000. NOI = $96,000. Overall cap rate = $96,000 / $1,000,000 = 9.6%. To solve this, multiply the relevant values: $96,000 and $800,000 at 10%.. The correct answer is 9.6%.. This is a common calculation on the Kansas real estate exam.
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