Property Management
What is a cap rate yield in property management investment analysis?
AThe maximum interest rate a lender charges
BThe capitalization rate comparing NOI to property value, indicating investment return before financing✓ Correct
CThe percentage of rent increases per year
DThe management fee cap
Explanation
The capitalization rate (cap rate) is the ratio of NOI to property value, expressing the unlevered (before financing) return. A 7% cap rate means a $100,000 investment in that property type would be expected to yield $7,000 NOI annually.
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