Real Estate Math
A property has an NOI of $48,000 and the building is valued at $500,000 while land is valued at $100,000. Using a building cap rate of 8% and land cap rate of 5%, the building income is:
A$48,000
B$43,000✓ Correct
C$5,000
D$40,000
Explanation
Land income = $100,000 × 5% = $5,000. Building income = $48,000 - $5,000 = $43,000. To solve this, multiply the relevant values: $48,000 and $500,000 at 8%.. The correct answer is $43,000.. This is a common calculation on the New York real estate exam.
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