A commercial property is currently valued at $10M. When fully leased (the property includes 20 office spaces) the property generates $1M in rental income per year. The annual operating costs (if fully leased) are equal to $150,000. On average, you expect a 20% vacancy rate (it will proportionally decrease both the rental income and the operating costs). Find the expected cap rate for the property.

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+ R 1.0 A V 10 V + R 1.0 A V 10 V

Answer rating: 100% (QA)

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