Basic Questions to know

Question 1

For example, if a building is priced at $1,000,000, and it generates $100,000 in net revenue, its capitalization, or ‘cap rate’ would be what?

Answer 1

10%
Cap rate = NOI/Market price
NOI=$100,000
Market Price= $1,000,000

Question 2

Which approach is used where the property is difficult to categorize or there are no similar properties to compare to?

1) Cost Approach
2) Direct Comparison
3) Income Approach

Answer 2

Cost Approach

Question 3

What is basically COST APPROACH

Answer 3

You basically find the cost of to BUILD or REPLACE the Building from the ground up.

Question 4

What is another name for INCOME APPROACH

Answer 4

Capitalization Approach