Real Estate Math
An investor purchases an apartment building for $1,200,000. The annual NOI is $96,000. What is the cap rate?
A7%
B8%✓ Correct
C9%
D10%
Explanation
Cap rate = NOI ÷ Value = $96,000 ÷ $1,200,000 = 0.08 = 8%. Using the values given ($1,200,000, $96,000), apply the appropriate formula.. The correct answer is 8%.. This is a common calculation on the Oregon real estate exam.
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