Question

property has Gross Scheduled Income of $100,000. The vacancy rate and credit rate allowance is 3% whereas Operating expenses are $34,000. a) What will be the Cap. Rate if you purchased the property for $600,000

Answer 1

Answer:

The answer is "$10.5\%$"

Explanation:

Following are the Cap rate:

 $= \frac{(Income \times (1 - vacancy\ rate) - operating \ expense)}{\text{purchase price of property}}$

$= \frac{(\ 100,000 \times 0.97 - \ 34,000)}{\ 600,000}\\\\= \frac{\ 63,000}{ \ 600,000}\\\\= 10.5\%$