Real Estate Math
A Washington property management contract specifies: 8% of gross collected rents plus $500 for each new lease. In one month, the manager collected $28,000 in rents and signed 3 new leases. Total fee for the month:
A$2,240
B$3,740✓ Correct
C$4,240
D$5,300
Explanation
Management fee = $28,000 × 8% = $2,240. New lease fees = 3 × $500 = $1,500.
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Key Terms to Know
Amortization
The 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.
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.
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