A property manager collects rent on 6 rental units for an owner. Each unit rents for $750 a month. The property manager charges the owner 10% of gross rents for the month and pays the mortgage payment of $1,800. If the manager makes repairs to the property of $275, what will the owner receive this month
The owner will receive $2,425 this month.
To determine the amount the owner receives, we first calculate the gross rent collected from all units, deduct the property manager's fee, and account for expenses like the mortgage and repairs. After these calculations, the final amount that remains for the owner is $2,425.
This option represents an incorrect calculation of the owner's share. The gross rent from the units is $4,500 ($750 x 6). After deducting the property manager's fee of $450 (10% of $4,500), the remaining amount is $4,050. Subtracting the mortgage payment of $1,800 and repairs of $275 gives a total of $2,425 for the owner, not $1,700.
This choice also reflects an incorrect total. If we subtract the property manager's fee from the gross rent, the remaining sum is $4,050. However, deducting the mortgage and repairs correctly leads to $2,425, not $1,975, which suggests a miscalculation in the expenses or the gross rent.
The figure of $3,775 does not account for the necessary deductions. Starting with the gross rent of $4,500 and subtracting the property manager's fee results in $4,050. However, after subtracting the mortgage payment and repair costs, the total should correctly be $2,425 instead of $3,775.
This option is the correct calculation. The gross rent is $4,500, the manager deducts $450, leaving $4,050. After subtracting the mortgage payment of $1,800 and the repairs of $275, the final amount the owner receives is indeed $2,425.
The calculations show that after accounting for the property manager's fee, mortgage payment, and repair costs, the owner ends up with $2,425. This illustrates the importance of accurately computing gross income and deductions to determine the net amount received from rental properties.
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