Real Estate Math
A commercial property leases 4,000 square feet at $18 per square foot per year on a net basis. What is the annual base rent?
A$72,000✓ Correct
B$68,000
C$80,000
D$54,000
Explanation
Annual base rent = 4,000 sq ft x $18/sq ft = $72,000. Using the values given ($18), apply the appropriate formula..
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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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