Ready to Tackle the Hawaii Pre-Licensing National Exam? Let's Break It Down!

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?

• A. $285
• B. $360
• C. $405
• D. $468

Answer: (A)

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

Preparing for the Hawaii Pre-Licensing National Exam can feel like climbing a mountain—challenging yet rewarding. If you’re eager to conquer this test, you’re in the right spot! One section that often perplexes students is understanding how property managers calculate their commissions, especially when tenants run into payment trouble. Let’s unravel a specific question to illustrate this.

Imagine you’re eyeing an apartment building with a potential gross monthly rent of $5,380. Seems straightforward, right? But what happens when a tenant can’t pay their rent of $625? That’s where the rubber meets the road. The effective gross income suddenly shifts from $5,380 down to $4,755. You feel that? That moment of realization—it’s crucial!

So, how does the property manager’s commission shake out in this scenario? Typically, a property manager gets their pay based on the effective gross income. Here’s how it works: we take that effective income of $4,755 and apply a common commission rate of 6%. Doing a quick calculation (just like we did back in math class), we find that $4,755 multiplied by 6% equals approximately $285.

You might be wondering why it’s important to grasp these figures. Well, the exam is rife with questions about different aspects of property management. Understanding the nuances of how commissions are calculated isn’t just about getting the right answer; it’s about building a robust foundation for your future in real estate. You know what I mean? The more comfortable you are with these concepts, the more confident you’ll feel walking into that exam room.

Now, let’s take a moment to talk commissions in real life. Think of them as a performance bonus. When property managers maximize rental income, they not only benefit themselves, but they also ensure that the owners are happy. It's a win-win situation; better revenue means everyone’s happier.

As you prep for the Hawaii Pre-Licensing National Exam, keep the idea of effective gross income and commission calculations close to your heart. You'll want to familiarize yourself with terms, concepts, and calculations, but remember to stay relaxed. It’s not just about the numbers; it’s also about the principles behind them. Creating mental connections between these ideas can be invaluable as you study.

So, as you hit the books, consider practicing with similar problems or even creating flashcards for key terms. Having a solid grasp of common pitfalls—like confusing gross income versus effective gross income—can save you precious time come exam day.

Get ready—you’ve got this! Remember, every little detail you learn is one step closer to passing your Hawaii Pre-Licensing National Exam with flying colors!