Real Estate Math
A Delaware commercial tenant leases 2,800 sq ft at $16/sq ft/year with a 3% annual escalation. What is the rent in Year 3?
A$47,829.44✓ Correct
B$47,488.00
C$44,800.00
D$46,144.00
Explanation
Year 1 Rent = 2,800 × $16 = $44,800. Year 2 = $44,800 × 1.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
AmortizationThe gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
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