Property Valuation
In Michigan, capitalization rate (cap rate) is calculated as:
AGross income ÷ Sale price
BNet operating income ÷ Value (or sale price)✓ Correct
CMonthly rent × 12 ÷ Down payment
DMortgage payment ÷ Property value
Explanation
Cap rate = Net Operating Income ÷ Value (or purchase price). It expresses the rate of return an investor can expect from an income-producing property.
Related Michigan Property Valuation Questions
- Functional obsolescence in a property refers to:
- A Michigan appraiser determines that the subject property's highest and best use as improved differs from its highest and best use as vacant. This typically means:
- In Michigan, 'appraisal independence' requirements under Dodd-Frank and HVCC require that:
- In the income approach, the Gross Rent Multiplier (GRM) is calculated by:
- In Michigan, when an appraiser finds no nearby comparable sales, they may:
- A Michigan commercial property has a net operating income of $90,000. Using a cap rate of 7.5%, what is the estimated value?
- Under Michigan's Proposal A, a property's taxable value increases annually by the lesser of 5% or:
- In Michigan, 'overimprovement' of a property occurs when:
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