Question

an apartment complex has the following characteristics:
6 three-bedroom units $600 monthly rent
12 two-bedroom units $475 monthly rent

given an expected vacancy rate of 5% percent, what is the potential annual gross income for this property?

$9,300
$106,020
$111,600
$115,200

question 14
because many mortgage loans are sold in the secondary market, lenders use ______ guidelines that are based on what secondary market participants are willing to buy.

income ratio
demographic
ethnic
architectural style

Explanation:

Calculate total monthly rent

Multiply the number of units by their respective monthly rents:

$$ \text{Monthly Rent} = (6 \times \$600) + (12 \times \$475) = \$3,600 + \$5,700 = \$9,300 $$

Calculate potential annual gross income

Multiply the total monthly rent by 12 months (potential gross income represents 100% occupancy, so vacancy rate is not deducted):

$$ \text{Potential Annual Gross Income} = \$9,300 \times 12 = \$111,600 $$

Identify secondary market guidelines

Analyze the second question regarding secondary mortgage market standards:
Lenders use standardized underwriting guidelines, specifically "income ratio" (debt-to-income ratios), to ensure loans qualify for purchase by secondary market participants like Fannie Mae and Freddie Mac.

Answer:

Question 1

• (A) \$9,300
• (B) \$106,020
• (C) \$111,600 (Correct answer)
• (D) \$115,200

Question 2

• (A) income ratio (Correct answer)
• (B) demographic
• (C) ethnic
• (D) architectural style