Real Estate Math
A Nebraska investment property's price is $875,000. The NOI is $70,000 and the cap rate is 8%. What is the difference between the asking cap rate and the market rate?
AAsking cap rate is 8%; market cap rate would need to be known for comparison
BAsking cap rate is 8%; the market price implies a different rate
CThe NOI at the asking price yields exactly 8%✓ Correct
DThe asking price implies 10% cap rate
Explanation
Cap rate = $70,000 ÷ $875,000 = 8%. The asking price is priced exactly at an 8% cap rate.
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