Real Estate Math
A Washington investor buys a 4-unit apartment building for $800,000. Total annual rent is $76,800. Expenses are 40% of gross rent. What is the cap rate?
A5.76%✓ Correct
B7.68%
C9.6%
D12%
Explanation
NOI = $76,800 × (1 − 0.40) = $76,800 × 0.60 = $46,080. Cap rate = $46,080 ÷ $800,000 = 5.76%. To solve this, multiply the relevant values: $800,000 and $76,800 at 40%.. The correct answer is 5.76%.. This is a common calculation on the Washington real estate exam.
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