Real estate question?
A property generates income of $1,000 per month, and the overall rate of return acceptable to investors in the marketplace is 10%. An appraiser would use this information to arrive at an estimated market value of
A. $10,000
B. $12,000
C. $100,000
D. $120,000
Answers & Comments
Verified answer
D
1k*12months=12k/year
12k/10%=120k
This is the money in, not the value of the property. If the investor was expected to put 20% of the purchase price down, this would be a 600k property.
This changes as the value does.