Real Estate Math
A West Virginia investor purchases a rental property for $220,000. Annual NOI is $18,700. What is the capitalization rate?
A7.5%
B8.0%
C8.5%✓ Correct
D9.0%
Explanation
Cap Rate = NOI / Purchase Price = $18,700 / $220,000 = 0.085 = 8.5%. Using the values given ($220,000, $18,700), apply the appropriate formula.. The correct answer is 8.5%.. This is a common calculation on the West Virginia real estate exam.
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