An appraiser valued a property at $95,000 with a monthly income of $1,108 and monthly expenses of $792. What capitalization rate did the appraiser use?

To determine the capitalization rate used by the appraiser, you first need to calculate the net operating income (NOI) of the property. The NOI can be found by subtracting the monthly expenses from the monthly income. In this case, the monthly income is $1,108, and the monthly expenses are $792.

Calculating the NOI:

NOI = Monthly Income - Monthly Expenses

NOI = $1,108 - $792 = $316

Next, to find the capitalization rate, you divide the annualized net operating income by the property value. Since the income is calculated on a monthly basis, you will need to annualize it by multiplying the monthly NOI by 12:

Annualized NOI = Monthly NOI x 12

Annualized NOI = $316 x 12 = $3,792

Now, you can calculate the capitalization rate using the formula:

Capitalization Rate = (Annualized NOI / Property Value) x 100%

Inserting the values:

Capitalization Rate = ($3,792 / $95,000) x 100%

Calculating this gives:

Capitalization Rate = 0.03992 x 100% = 3.99%

After verifying the calculation, the correct answer is