Real Estate Math

A South Carolina investor wants a 9% cap rate on a property with annual NOI of $36,000. What is the maximum price they should pay?

A$324,000
B$400,000✓ Correct
C$360,000
D$432,000

Explanation

Maximum price = NOI / Cap Rate = $36,000 / 0.09 = $400,000. To solve this, multiply the relevant values: $36,000 at 9%.. The correct answer is $400,000.. This is a common calculation on the South Carolina real estate exam.

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