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$9.$ Choosing a real estate investment

Comparing Real Estate Investments

Suppose Gilberto wants to invest in real estate and is considering two different residential properties. Based on the expected incomes and operating expenses of each, he estimates that the first property $($property A$)$ has an NOI of $$42,000$ and that the other $($property B$)$ has an NOI of $$30,000.$

If the cap rate is $10\%,$ property A has an 'estimated value of and property $B$ has an estimated value of In deciding between these two properties, it is important for Gilberto to consider other factors. If he is a first$-$time investor, he is probably better off investing in property. $($Note: Round your answers to two decimal places.$)$

Alternatively, Gilberto might want to consider investing in a real estate investment trust $($REIT$),$ a type of investment company that operates similarly to mutual fund. Which of the following statements regarding REITs are true? Check all that apply.

All REITs own income$-$producing real estate such as office buildings and hotels.

Income distributed from REIT investments is taxed at $15\%.$

They allow individuals to buy shares in a real estate$-$based stock portfolio.

They pay dividends.