Real Estate Math
A Pennsylvania property management company charges 8% of collected rents. If a building collects $180,000 in rent annually and has a 5% vacancy rate, what is the management fee?
A$13,680✓ Correct
B$14,400
C$12,600
D$15,000
Explanation
Effective Gross Income (collected rents) = $180,000 × (1 − 0.05) = $171,000. Management fee = $171,000 × 8% = $13,680. Management fees are typically charged on collected rents (not potential gross), so vacancy reduces the fee.
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