Real Estate Math
A Minnesota apartment building with 15 units rents at an average of $1,100/month. The current cap rate for similar properties is 6.5%. What is the estimated value using the income approach?
A$3,046,154✓ Correct
B$2,815,385
C$3,323,077
D$2,538,462
Explanation
Annual gross rent = 15 x $1,100 x 12 = $198,000. For a simplified income approach (assuming NOI equals gross rent for estimation purposes without operating expenses specified): Value = $198,000 / 0.065 = $3,046,154. In practice, the NOI (after vacancy and expenses) would be used. This is a common exam-style calculation for Minnesota income property.
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