Real Estate Math
A Washington investor receives a monthly net income of $4,200 from a rental property purchased for $630,000. What is the annual capitalization rate (cap rate) for this investment?
A8.0%✓ Correct
B6.67%
C7.5%
D8.5%
Explanation
Annual NOI = $4,200 × 12 = $50,400. Cap rate = $50,400 ÷ $630,000 = 8.0%. Using the values given ($4,200, $630,000), apply the appropriate formula.. The correct answer is 8.0%.. This is a common calculation on the Washington real estate exam.
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