Question

Diane paid $600,000 for a six-unit apartment building. The gross income is $900 per month per unit, with annual expenses of $16,800 annually. What was the capitalization rate for this investment

Answer 1

8%

Step-by-step explanation:

First calculate annual gross income. 900 x 6 x 12 = 64,800. Next determine the net income. 64,800 - 16,880 = 48,000. 48,000 / 600,000 = .08 or 8%