Cap rate = NOI / value. Value = NOI / cap rate. NOI = effective gross income - operating expenses. Debt service is not an operating expense.
- 510 national questions + 5 state banks
- Timed simulator matched to your vendor
- 90 days, one-time - emailed to you after purchase
Emailed to you after purchase. Supplemental exam prep, not pre-licensing hours. 14-day money-back guarantee. Refund policy
Worked example
A building grosses $120,000, with 5% vacancy and $38,000 of operating expenses. Investors expect a 7.6% cap rate.
- Effective gross income: $120,000 x 0.95 = $114,000
- NOI: $114,000 - $38,000 = $76,000
- Value: $76,000 / 0.076 = $1,000,000
Here is the trap
- Subtracting the mortgage. Principal and interest are financing, not operations.
- Direction. Higher cap rate = lower value for the same NOI.
- Monthly figures. Annualize before dividing.
Cap rate / value solver
- 510 national questions + 5 state banks
- Timed simulator matched to your vendor
- 90 days, one-time - emailed to you after purchase
Emailed to you after purchase. Supplemental exam prep, not pre-licensing hours. 14-day money-back guarantee. Refund policy
Practice tool for exam-style math. Check your state and contract for local conventions.
Ready for the full bank?
510 national questions + state banks for CA, FL, GA, NY and TX, a timed simulator in your vendor’s format, and weakness tracking. $19 one-time for 90 days, emailed to you after purchase.
- 510 national questions + 5 state banks
- Timed simulator matched to your vendor
- 90 days, one-time - emailed to you after purchase
Emailed to you after purchase. Supplemental exam prep, not pre-licensing hours. 14-day money-back guarantee. Refund policy