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

The answer is "
`10.5\%`"

Step-by-step explanation:

Following are the Cap rate:

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

`= ((\$ 100,000 * 0.97 - \$ 34,000))/(\$ 600,000)\\\\= (\$ 63,000)/( \$ 600,000)\\\\= 10.5\%`