Real Estate MathIntermediateNorth Carolina Exam

A NC investment property has an asking price of $650,000 and an NOI of $45,500. The implied cap rate is:

Q: A NC investment property has an asking price of $650,000 and an NOI of $45,500. The implied cap rate is:

Cap rate = NOI / Value = $45,500 / $650,000 = 0.07 = 7.0%. Using the values given ($650,000, $45,500), apply the appropriate formula.. The correct answer is 7.0%.. This is a common calculation on the North Carolina real estate exam.

A6.5%

B7.0%Correct

C7.5%

D8.0%

Why 7.0% Is Correct

Answer B: 7.0%

Cap rate = NOI / Value = $45,500 / $650,000 = 0.07 = 7.

Exam Tip: Real Estate Math

Math questions are formula-based. Memorize the key formulas: commission splits, proration, cap rate (NOI ÷ Value), GRM (Price ÷ Gross Rent), and LTV (Loan ÷ Value). Practice converting between annual and monthly figures.

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Key Terms to Know

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.

Net Operating Income (NOI)

The annual income generated by an income-producing property after subtracting operating expenses, but before debt service.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

Amortization

The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.

Math Concepts

Capitalization Rate Net Operating Income

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