Ace the California Real Estate Exam 2025 – Your Key to Property Success!

Question: 1 / 585

An investor purchased a $140,000 four-unit apartment building. For a "Cap Rate" of 10%, what would the owner have to get monthly from each of the two-bedroom units?

$252

To determine the monthly rent required from each of the two-bedroom units for a cap rate of 10% on a $140,000 property, we start by calculating the annual income needed to achieve this cap rate.

The cap rate formula is:

\[ \text{Cap Rate} = \frac{\text{Net Operating Income}}{\text{Property Value}} \]

Rearranging this formula gives us:

\[ \text{Net Operating Income} = \text{Cap Rate} \times \text{Property Value} \]

Substituting the known values into the equation gives:

\[ \text{Net Operating Income} = 0.10 \times 140,000 = 14,000 \]

This figure represents the annual income the property must generate. To find the monthly income, we divide the annual income by 12:

\[ \text{Monthly Income} = \frac{14,000}{12} \approx 1,166.67 \]

Since there are four units in the building, we divide the monthly income by the number of units:

\[ \text{Rent per Unit} = \frac{1,166.67}{4} \approx 291.67 \]

Given the available options,

Get further explanation with Examzify DeepDiveBeta

$272

$292

$342

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