Ace the Alabama Real Estate Exam 2025 – Unlock Your Dream Career!

Question: 1 / 400

What is the capitalization rate used to express?

The interest rate of a mortgage

The appreciation rate of a property

The ratio of net operating income to property asset value

The capitalization rate is used to express the ratio of a property's net operating income to its asset value. This is typically used in real estate investment to determine the potential return on investment and the value of a property. Option A is incorrect because the interest rate of a mortgage refers specifically to the cost of borrowing money from a lender, not the rate of return on a property. Option B is incorrect because appreciation rate refers to the increase in value of a property over time, not its rate of return. Option D is incorrect because it refers to the percentage of rental income to the total value of the property, while the capitalization rate looks at operating income specifically.

Get further explanation with Examzify DeepDiveBeta

The percentage of annual rental income to the total value of the property

Next Question

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy