Before you read
Test yourself first: 5 questions
Question 1 of 5
A property has net operating income of $24,000 and sells at an 8% capitalization rate. What is its value?
Answer: A. Value = NOI ÷ cap rate = $24,000 ÷ 0.08 = $300,000.
Question 2 of 5
A property generates a net operating income (NOI) of $60,000 and sold for $750,000. What is the capitalization rate?
Answer: B. Cap rate = NOI / value = $60,000 / $750,000 = 0.08, or 8%.
Question 3 of 5
A property valued at $500,000 has a capitalization rate of 9%. What is its net operating income?
Answer: B. NOI = value x cap rate = $500,000 x 0.09 = $45,000.
Question 4 of 5
A property sold for $240,000 and produces gross annual rental income of $30,000. What is the gross rent multiplier (GRM)?
Answer: B. GRM = sale price / gross annual rent = $240,000 / $30,000 = 8.
Question 5 of 5
A property is listed for $300,000 and has an annual gross income of $40,000. Comparable properties sell at a GRM of 7. Compared with the market, this property is:
Answer: C. Market value by GRM = $40,000 x 7 = $280,000; since the $300,000 list price exceeds $280,000, the property is overpriced.
Keep the streak going with more questions like these, each with a full rationale.
What you need to know
At an 8% cap rate, value = $126,000 ÷ 0.08 = $1,575,000. Flip any leg: NOI = value × rate; rate = NOI ÷ value. Cash-on-cash return = pre-tax cash flow (NOI − debt service) ÷ cash invested. When a question changes ONE input (raise rents, cut vacancy), rebuild only from that line down — and never let debt service sneak into NOI.
Income-Property Math End to End: FAQs
Is Income-Property Math End to End on the real estate exam?
Yes. Real Estate Math is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
