Real Estate Math
A NC investor buys an apartment building for $1,800,000. The annual NOI is $126,000. The overall cap rate is:
A6.5%
B7.0%✓ Correct
C7.5%
D8.0%
Explanation
Cap rate = NOI / Value = $126,000 / $1,800,000 = 0.07 = 7.0%. Using the values given ($1,800,000, $126,000), apply the appropriate formula.. The correct answer is 7.0%.. This is a common calculation on the North Carolina real estate exam.
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