3. A 50 unit apartment building has 20 – 1bedroom units; 20 – 2 bedroom units; and 10 - 3 bedroom units. The market price for the units is $600, $700, and $850 respectively. There is currently one of each unit vacant. Late fees are $15 and concessions include one month free rent when you sign a one year lease.
a. Calculate the monthly GPI: (1pt)
b. Suppose in September concessions were offered to one of the 3 bedroom units, 6 units paid late, and miscellaneous income was $1000. Calculate the Effective Gross Income (EGI) (2pts)
$34,500
To calculate the Monthly Gross Potential Income (GPI), we need to multiply the number of units in each category by the market price for those units and sum them up.
a. Calculation of Monthly GPI:
Number of 1-bedroom units: 20
Rent for 1-bedroom units: $600
Number of 2-bedroom units: 20
Rent for 2-bedroom units: $700
Number of 3-bedroom units: 10
Rent for 3-bedroom units: $850
GPI for 1-bedroom units: 20 * $600 = $12,000
GPI for 2-bedroom units: 20 * $700 = $14,000
GPI for 3-bedroom units: 10 * $850 = $8,500
Total Monthly GPI = $12,000 + $14,000 + $8,500 = $34,500
Therefore, the Monthly Gross Potential Income (GPI) is $34,500.
b. To calculate the Effective Gross Income (EGI), we need to deduct any concessions, late fees, and add miscellaneous income to the Monthly Gross Potential Income (GPI).
Given the information for September:
Concession given to one 3-bedroom unit: 1 * $850 = $850
Late fees for 6 units: 6 * $15 = $90
Miscellaneous income: $1000
Subtracting the concessions and adding the miscellaneous income:
Effective Gross Income (EGI) = Monthly GPI - Concessions + Miscellaneous Income
EGI = $34,500 - $850 + $1000 - $90
EGI = $34,500 + $150 - $90
EGI = $34,560
Therefore, the Effective Gross Income (EGI) for September is $34,560.