Real Estate Math
A Vermont duplex is valued using an 8% cap rate. Monthly rents are $1,350 and $1,250. Annual expenses are $9,720. What is the estimated value?
A$268,500✓ Correct
B$252,000
C$275,000
D$281,250
Explanation
Annual gross rent = ($1,350 + $1,250) x 12 = $2,600 x 12 = $31,200. NOI = $31,200 - $9,720 = $21,480. Value = $21,480 / 0.08 = $268,500.08 = $268,500. Note:
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