A property manager receives a commission of 3% of annual gross rental income. If base rent is 24,000 and percentage rent is 12,000, while operating expenses are paid separately in a triple net lease, what is the manager's commission?

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Study for the Washington Real Estate Fundamentals Rockwell Exam. Utilize flashcards, multiple choice questions with hints and explanations. Prepare thoroughly for your real estate career!

Multiple Choice

A property manager receives a commission of 3% of annual gross rental income. If base rent is 24,000 and percentage rent is 12,000, while operating expenses are paid separately in a triple net lease, what is the manager's commission?

Explanation:
The main concept is that commissions are based on gross rental income, not net. In a triple net lease, operating expenses are paid by the tenant separately, so they don’t enter the landlord’s gross income used to calculate the commission. Here, gross rental income equals base rent plus any additional rent: 24,000 + 12,000 = 36,000. The manager earns 3% of that amount, which is 0.03 × 36,000 = 1,080. Operating expenses are excluded from this calculation.

The main concept is that commissions are based on gross rental income, not net. In a triple net lease, operating expenses are paid by the tenant separately, so they don’t enter the landlord’s gross income used to calculate the commission. Here, gross rental income equals base rent plus any additional rent: 24,000 + 12,000 = 36,000. The manager earns 3% of that amount, which is 0.03 × 36,000 = 1,080. Operating expenses are excluded from this calculation.

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