What is the formula used to calculate the overall rate (Ro)?

The formula used to calculate the overall rate (Ro) in real estate valuation is indeed the ratio of Net Operating Income (NOI) to Property Value. This formula provides a clear indication of the yield or return on an investment property, making it a fundamental concept in real estate analysis.

To elaborate, Net Operating Income represents the income generated from the property after deducting all operating expenses, but before financing costs and taxes. Property Value is typically the market value or the appraised value of the property. By dividing NOI by Property Value, you determine the overall capitalization rate, which reflects the potential return on investment. This calculation is crucial for investors and appraisers in assessing the profitability of real estate investments and aids in comparing different properties or investment opportunities.

Each of the other options serves a different purpose in financial analysis or property valuation. For instance, EGI (Effective Gross Income) divided by Operating Expenses does not yield an overall rate but rather assesses operational efficiency or rent collections. The millage rate multiplied by the assessment level relates to property taxation rather than investment return evaluation. Lastly, the standard deviation divided by the mean multiplied by 100 provides a measure of relative variability (coefficient of variation) but is not relevant to calculating Ro. Therefore, the