Real Estate Math
A property manager is paid a 10% leasing commission on the first year's rent for a new commercial lease. The 5-year lease has a base rent of $4,500/month in year 1, with 3% annual increases. What is the leasing commission?
A$5,400✓ Correct
B$4,500
C$54,000
D$27,000
Explanation
Leasing commission = 10% × first year's annual rent = 10% × ($4,500 × 12) = 10% × $54,000 = $5,400. To solve this, multiply the relevant values: $4,500 at 10%..
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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.
Math Concepts
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