Real Estate Math
An investor purchases a rental property for $180,000 and receives annual net income of $14,400. What is the capitalization rate?
A6%
B7%
C8%✓ Correct
D9%
Explanation
Cap rate = NOI / Value = $14,400 / $180,000 = 0.08 = 8%. Using the values given ($180,000, $14,400), apply the appropriate formula.. The correct answer is 8%.. This is a common calculation on the New Mexico real estate exam.
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