Real Estate Math
A Missouri investor purchases a fourplex for $400,000. Annual gross rent is $48,000, expenses are $16,000. What is the cap rate?
A5%
B8%✓ Correct
C10%
D12%
Explanation
NOI = $48,000 − $16,000 = $32,000. Cap rate = $32,000 ÷ $400,000 = 8%.
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