Real Estate Math
A Massachusetts investor receives annual rental income of $72,000 from a property purchased for $900,000. What is the gross income yield (cap rate approximation)?
A8%✓ Correct
B12.5%
C6%
D9%
Explanation
Gross yield = Annual Income ÷ Purchase Price = $72,000 ÷ $900,000 = 0.08 = 8%.
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