A tenant's annual expenses included the following: $24,000 for base rent, $8,400 for taxes, insurance, and common area maintenance (triple net). The property manager receives a fee of 3% of gross annual rent. How much will the property manager receive?

Rationale

$720

The property manager's fee is calculated as 3% of the total gross annual rent, which in this case is solely the base rent, amounting to $24,000. Therefore, the fee can be found by multiplying $24,000 by 0.03, resulting in $720.

A ($720) CORRECT

This amount is correctly calculated as 3% of the gross annual rent of $24,000. The calculation is straightforward: $24,000 * 0.03 = $720, making this the correct answer.

B ($1,000) YOUR ANSWER

This option suggests a fee that would be derived from a different percentage of the gross annual rent or an incorrect total. Specifically, $1,000 would imply a fee percentage of approximately 4.17%, which does not match the specified 3% rate.

C ($1,080) YOUR ANSWER

This choice also miscalculates the fee based on an incorrect percentage. To arrive at $1,080, one would need a gross rent of $36,000, which does not apply here, as the gross annual rent is $24,000.

D ($1,332) YOUR ANSWER

This figure is significantly higher than the calculated fee and does not correspond to any logical percentage of the gross rent. For a property management fee of $1,332, the gross rent would have to be around $44,400, which again is not the case in this scenario.

Conclusion

The property manager is entitled to a fee of $720, which is precisely 3% of the gross annual rent of $24,000. Incorrect options arise from misunderstandings or miscalculations of the fee percentage or gross rent amount. Understanding the basic calculation of property management fees is essential for accurate financial planning in real estate.

A tenant's annual expenses included the following: $24,000 for base rent, $8,400 for taxes, insurance, and common area maintenance (triple net). The property manager receives a fee of 3% of gross annual rent. How much will the property manager receive?

$720

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