Real Estate Math
A Kentucky investor wants to buy a property that generates $2,200/month net rent. If they want a 7% annual return (cap rate), what is the maximum price they should pay?
A$314,285
B$376,000✓ Correct
C$330,000
D$277,142
Explanation
Annual NOI = $2,200 x 12 = $26,400. Maximum price = NOI / Cap rate = $26,400 / 0.
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