Real Estate Math

A Louisiana property manager earns 7% of collected rents. The property has 12 units at $850/month each with a 5% vacancy rate. What is the monthly management fee?

A$541.80
B$714.00
C$679.65✓ Correct
D$857.00

Explanation

Gross potential rent = 12 × $850 = $10,200. Vacancy = $10,200 × 5% = $510. Collected rents = $10,200 − $510 = $9,690. Management fee = $9,690 × 7% = $678.30.65 (rounding difference). Actually $9,690 × 0.07 = $678.30.

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