Real Estate Math

A Missouri investment property is purchased for $225,000. Annual NOI is $18,000. What is the cap rate?

A6%
B7%
C8%✓ Correct
D9%

Explanation

Cap rate = NOI ÷ Purchase price = $18,000 ÷ $225,000 = 8%. Using the values given ($225,000, $18,000), apply the appropriate formula..

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