Real Estate Math
A Minnesota commercial building has 8,000 square feet of leasable space at $18/sq ft/year net. The building sold for $1,440,000. What is the cap rate?
A8%
B10%✓ Correct
C12%
D6%
Explanation
Annual NOI = 8,000 sq ft x $18 = $144,000. Cap rate = NOI / Value = $144,000 / $1,440,000 = 0.
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