Question

A building has a potential gross rental income of $145,000 with vending receipts of $5,000 and a vacancy rate of 5%. the annual expenses of the building are $15,000 in taxes, insurance $4,000, maintenance $10,000, utilities $6,000, repairs $3,500, legal fees $1,500, management fees @ 4% of effective gross income. what is the effective gross income of the property?

Answer 1

Effective gross income = Total Potential income-Expenses- management fees
Total potential income = gross rental income + vending receipts- gross rental income vacancy
 gross rental = $145000
vending receipts = $5000
rental vacancy = $7250
total potential income = $142,750
Expenses = taxes+insurance +maintenance + utilities + repairs +legal fees
Expenses = $40,000
management fee = (total potential income- expenses) x.04
management fee = $4110
gross effective income = $142750-$40000-$4110
                                        = $98640