Real Estate Math
A lease requires monthly rent of $2,200 with 3% annual increases. What will the monthly rent be in year 3?
A$2,332
B$2,334
C$2,338✓ Correct
D$2,464
Explanation
Year 1: $2,200. Year 2: $2,200 × 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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