What is the capitalization rate

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The following data shows financial details of a block of 12 flats; six flats with 2 bedrooms and six flats with 3 bedrooms. If the purchase price of the flats is $1250 000, what is the capitalization rate? Assume a 52 week year.

Income ($ per week)

2 bedroom $250

3 bedroom $400

Expenditure ($ per annum)

Water Rates $5,000

Council Rates $8,000

Insurance $2,500

Repairs & Maintenance $3,000

Electricity $700

Cleaning $5,000

Yard Maintenance $500

Plant Hire $200

Recarpet Flats #6 & #7 $4,000

Reference no: EM133253902

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