In January 2026, investor Andre Bell studies a small apartment sale that closed at $750,000. The property's stabilized NOI is $60,000 per year. What overall cap rate is indicated by the sale?
Correct Answer
C) 8%
Step 1: Cap Rate = NOI ÷ Sale Price. Step 2: $60,000 ÷ $750,000 = 0.08. Step 3: Convert the decimal to a percentage, giving an indicated cap rate of 8%.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Highest and best use is an appraisal concept that identifies the most profitable, legally permitted, physically possible, and financially feasible use of a property. It is the foundation of all property valuation.
Homestead portability allows homeowners to transfer a portion of their accumulated homestead tax savings to a new homestead in the same state.
The income approach estimates a property's value based on the income it generates by converting net operating income into a value estimate using a capitalization rate. It is the preferred method for income-producing properties.
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In December 2026, broker Janelle Kim is estimating value for a single-family home in a subdivision made up almost entirely of owner-occupied houses. Very little reliable rental data exists nearby. Which statement is most accurate?
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