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?

Rationale

$2,425

To determine the amount the owner will receive this month, we first calculate the total gross rent collected, deduct the property manager's fees, and account for the mortgage payment and repair costs.

A ($1,700) YOUR ANSWER

This option underestimates the total amount the owner would receive. The calculation does not account for the gross rent collected or the deductions accurately, leading to a significantly lower amount than what is correct.

B ($1,975) YOUR ANSWER

This choice suggests a sum that still fails to consider the full gross income and the deductions properly. The calculation likely omitted some key components, such as the total rent or incorrectly factored in the manager's fees.

C ($3,775) YOUR ANSWER

This figure incorrectly represents the owner's net income, as it does not account for the necessary deductions of the manager's fee and the mortgage payment. It assumes an incorrect understanding of how expenses affect the final amount received by the owner.

D ($2,425) CORRECT

To reach this figure, we first calculate gross rent: 6 units x $750 = $4,500. The property manager charges 10% of this, which is $450. After deducting the mortgage payment of $1,800 and repair costs of $275, the calculation is: $4,500 - $450 - $1,800 - $275 = $2,425.

Conclusion

The owner will receive $2,425 this month after accounting for gross rent, the property manager's fee, the mortgage payment, and repair costs. This calculation illustrates the importance of considering all income and expenses to arrive at the correct net amount for the owner.

$2,425

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