Real Estate Math

A property in Lawton, Oklahoma has an NOI of $55,000. The purchase price was $650,000. What is the overall capitalization rate?

A8.46%✓ Correct
B11.82%
C6.50%
D7.50%

Explanation

Cap Rate = NOI ÷ Value. $55,000 ÷ $650,000 = 0.0846 = 8.46%. This is the overall rate of return on the investment at this price.

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