Real Estate Math
A Mississippi investor purchases a rental property for $120,000. The annual gross rent is $14,400 and annual expenses are $5,400. The capitalization rate is approximately:
A7.5%✓ Correct
B8%
C10%
D12%
Explanation
NOI = $14,400 − $5,400 = $9,000. Cap Rate = $9,000 ÷ $120,000 = 0.
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