Hawaii Pre-Licensing National Practice Exam

If the potential gross monthly rent on an apartment building is $5,380 and operating expenses were $3,500, what would the property manager's commission be if a tenant failed to pay their monthly rent of $625?

1. $285

2. $360

3. $405

4. $468

The correct answer is: $285

To determine the property manager's commission when a tenant fails to pay their monthly rent of $625, the focus is on the operating income that the property manager would be working with. First, the potential gross monthly rent is $5,380, and if a tenant fails to pay $625, the effective income from the property becomes $5,380 minus $625. This calculation results in $4,755 as the effective gross income. The property manager typically earns a commission based on the effective gross income, which in this case would be $4,755. However, the context of the commission structure needs to be clarified to ensure we understand how to arrive at the figure provided in the correct answer. When the commission is a percentage of the effective gross income, the specific percentage needs to be known. Assuming a common property management commission rate of 6% (for the purpose of this question), the commission would be calculated as follows: $4,755 (effective gross income) x 6% = approximately $285. Thus, the property manager's commission in this scenario would be $285, aligning with the answer choice provided. The rationale behind this calculation is that commissions are typically earned based on gross revenue generated, and that revenue