Real Estate Math
A Massachusetts property manager charges 8% of gross rents collected plus a $500 monthly management fee. Monthly gross rents are $14,000. What is the monthly management cost?
A$1,120
B$1,500
C$1,620✓ Correct
D$2,000
Explanation
Percentage fee = $14,000 × 8% = $1,120. Total monthly fee = $1,120 + $500 = $1,620.
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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.
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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