Real Estate Math
An investor purchases a property for $1,200,000. Annual NOI is $90,000. What is the cap rate?
A6.5%
B7%
C7.5%✓ Correct
D8%
Explanation
Cap rate = NOI / Value = $90,000 / $1,200,000 = 0.075 = 7.5%. Using the values given ($1,200,000, $90,000), apply the appropriate formula.. The correct answer is 7.5%.. This is a common calculation on the New York real estate exam.
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