An investment property has a net operating income of $36,000 and a cap rate of 8%. What is the property value?
Correct Answer
B) $450,000
Value = NOI / Cap Rate = $36,000 / 0.08 = $450,000. The capitalization rate is used to determine value based on income.
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
Net Operating Income (NOI) is the revenue a property generates after deducting all operating expenses.
The capitalization rate (Cap Rate) is the rate of return on a real estate investment based on its expected income.
In real estate, property value can be estimated by dividing the Net Operating Income (NOI) by the Capitalization Rate (Cap Rate).
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An agent receives 50% share of a 3% gross commission. The property sold for $350,000. How much commission will the agent receive?
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Annual property taxes are $4,380. The property closes on March 15. If the seller has NOT paid taxes for the current year, how much does the seller owe at closing? (Use 365 days)