$$ A Purdue janitor with an IU PhD is evaluating a $4$ plex just off campus.$$ 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?