Real Estate Math
A 10-unit building has 10% vacancy. 8 occupied units rent for $1,100/month and the remaining occupied unit rents for $950/month. What is the monthly effective gross income?
A$7,850
B$9,750✓ Correct
C$9,650
D$10,450
Explanation
Occupied units = 10 × (1 − 0.10) = 9 units.
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Key Terms to Know
Debt-to-Income Ratio (DTI)
A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
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.
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