A rental property in Vancouver generates $4,000 monthly rent with annual operating expenses of $18,000. Using a capitalization rate of 5%, what is the estimated value using the income approach?
Correct Answer
A) $600,000
Net Operating Income = ($4,000 × 12) - $18,000 = $48,000 - $18,000 = $30,000. Property Value = NOI ÷ Cap Rate = $30,000 ÷ 0.05 = $600,000.
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Previous Question
A rental property generates $3,000 monthly rent with annual operating expenses of $8,000. Using a capitalization rate of 6%, what is the estimated value using the income approach?
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