Real Estate Math
A property manager charges a 9% management fee on collected rents. The property generates $4,500/month in rents with a 5% vacancy rate. What is the management fee per month?
A$405
B$384.75✓ Correct
C$427.50
D$450
Explanation
Effective gross income = $4,500 × (1 – 0.05) = $4,500 × 0.
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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.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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.
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