Real Estate Math
A Washington commercial lease provides for annual rent increases equal to the greater of 2% or CPI. CPI for the year was 1.5%. If the base rent was $6,000/month, what is the new monthly rent?
A$6,090
B$6,120✓ Correct
C$6,180
D$6,200
Explanation
The greater of 2% or 1.5% CPI = 2%.
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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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