A property manager collects rent on 8 rental units for an owner. Each unit rents for $275 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 at a cost of $275, what will the owner receive this month?

Rationale

$1,975 will be received by the owner this month.

To determine the amount the owner receives, we first calculate the total rent collected from the units, subtract the property manager's fee and the repair costs, and then account for the mortgage payment.

A ($1,700) YOUR ANSWER

This amount does not account for the correct calculations of gross rents and expenses. Specifically, it fails to accurately include the total rent collected and the deductions for the property manager's fee and repair costs, leading to an incorrect final amount for the owner.

B ($1,975) CORRECT

This is the correct answer. The total rent for 8 units at $275 each amounts to $2,200. The property manager's 10% fee is $220, bringing the total after the fee to $1,980. After paying the mortgage of $1,800 and the repair cost of $275, the owner is left with $1,975.

C ($3,775) YOUR ANSWER

This figure incorrectly represents the total income or a combination of rents and other costs. It does not reflect the deductions for the property manager's fee and the repairs, which significantly lower the owner's actual receipt.

D ($2,425) YOUR ANSWER

This choice mistakenly assumes lower deductions than actually occurred. It incorrectly calculates the net amount the owner receives by not accurately deducting both the property manager's fee and the repair costs, resulting in an inflated figure.

Conclusion

The owner receives $1,975 after all deductions are made from the rent collected. By calculating the total rent, subtracting the property manager's fee, mortgage payment, and repair costs, we arrive at the accurate amount owed to the owner. Understanding these financial transactions is essential for property management and ensuring all parties are satisfied with the monthly dealings.

$1,975 will be received by the owner this month.

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