A long-term resident moves out of apartment #35 on the last day of May because they are unhappy with their neighbor, and later a new resident takes possession on June 16. You begin to wonder what the total economic cost of the vacancy was. The rent on the apartment is $650. Painting labor cost you $250, and you had to purchase 3.5 gallons of paint at $12 per gallon. The cleaner cost $85, and the carpet cleaner charged you $75. You ran an ad in the Oregonian for $350 to get the apartment rented. In order to convince the resident to sign a lease, you had to give him a 1/2-month rent-free lease concession (assume a 30 day month).

Question

A long-term resident moves out of apartment #35 on the last day of May because they are unhappy with their neighbor, and later a new resident takes possession on June 16. You begin to wonder what the total economic cost of the vacancy was. The rent on the apartment is $650. Painting labor cost you $250, and you had to purchase 3.5 gallons of paint at $12 per gallon. The cleaner cost $85, and the carpet cleaner charged you $75. You ran an ad in the Oregonian for $350 to get the apartment rented. In order to convince the resident to sign a lease, you had to give him a 1/2-month rent-free lease concession (assume a 30 day month).

Answer 1

rent is 650, new resident will move in June 16, however, in order to convince him to move in you had to give him 1/2-month rent free assumed a 30 day month.

I divide 650/30 and i get =21.666666667 x 16= 346.66666667, but I's not coming out right. Can you please help me. THANK YOU!!

Answer 2

To calculate the total economic cost of the vacancy, we need to consider all the expenses incurred during the period when the apartment was vacant.

1. Rent: The apartment was vacant from June 1st (when the long-term resident moved out) until June 16th (when the new resident moved in). This is a period of 15 days. So, the rent loss during this period is calculated as:
Rent loss = (Rent per day) x (Number of vacant days)
= ($650 / 30) x 15 (assuming a 30-day month)
= $325

2. Painting: The cost of painting the apartment includes labor and material expenses. Since you mentioned the cost of labor ($250) separately, we need to calculate the cost of materials:
Cost of paint = (Quantity of paint) x (Cost per gallon)
= 3.5 x $12
= $42

3. Cleaning: The cost of cleaning the apartment is $85.

4. Carpet cleaning: The cost of professional carpet cleaning is $75.

5. Advertisement: The cost of running an ad in the Oregonian newspaper is $350.

6. Lease concession: You provided a 1/2-month rent-free lease concession to convince the new resident to sign a lease. This is equal to 15 days ((1/2) x 30) since we assumed a 30-day month. So, the rent loss due to this concession is:
Lease concession loss = (Rent per day) x (Number of concession days)
= ($650 / 30) x 15
= $325

To calculate the total economic cost of the vacancy, we add up all these expenses:
Total cost = Rent loss + Cost of paint + Cleaning cost + Carpet cleaning cost + Advertisement cost + Lease concession loss

Substituting the values we calculated:
Total cost = $325 + $42 + $85 + $75 + $350 + $325
Total cost = $1202

Therefore, the total economic cost of the vacancy was $1202.