Free Pennsylvania Real Estate Practice Exam Practice Question
An investor pays $500,000 for an eight-unit multi-family property. Each unit rents for $1,000 per month. If the management fee is 15%, what is the annual management fee?
Correct Answer: C
Rationale: To determine the annual management fee, first calculate the total monthly rent for all units. With eight units renting at $1,000 each, the total monthly rent is $8,000. The annual rent, therefore, is $8,000 multiplied by 12, equaling $96,000.
Next, apply the management fee of 15% to the annual rent: 0.15 x $96,000 equals $14,400. However, this calculation does not match the provided options, indicating a potential error in the question's context.
- Option A ($7,650) is incorrect as it underestimates the management fee.
- Option B ($8,000) also falls short, not reflecting the correct percentage of total rent.
- Option D ($40,000) overestimates the fee, suggesting a misunderstanding of the percentage calculation.
Thus, while the initial calculation leads to $14,400, the provided options may need reevaluation for accuracy.
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