A Purdue janitor with an IU PhD is evaluating a $4$ plex just off campus.$$ He wants to know what the value of the property is using the cap rate method.

$$ Details:

o Rent is $$750/$month$/$unit

o Vacancy of the area is $10\%$

o Real estate taxes are $$1,000/$unit$/$year

o Utilities are $$400/$unit$/$year

o Variable expenses are $$2,500/$unit$/$year

o Interest on a $$100,000$ loan is $7\%$

o Cap rate is $10\%$ on an investment of this type

$$ What is the value of the investment?