Real Estate Math
An office building has 50,000 rentable square feet with current occupancy of 88%. At $22 per square foot annually, what is the effective gross annual rent?
AA. $968,000✓ Correct
BB. $880,000
CC. $1,100,000
DD. $968,000
Explanation
Occupied square feet = 50,000 × 88% = 44,000 sq ft. Annual effective gross rent = 44,000 × $22 = $968,000.
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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.
Math Concepts
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