Question

) Suppose a small-scale landlord operates an apartment building having ten two-bedroom apartments. Each apartment rents for $955 per month. The landlord has determined that the market now supports rents of $995 per month. Moreover, this month one unit will come open, because the tenant is at the end of the lease and is moving to another city. The landlord advertises that unit at $995 and successfully leases the unit. However, at the same time, a lease is expiring for another two-bedroom unit and the landlord wishes to retain that tenant. Instead of bumping the rent at renewal to the market rate, the landlord proposes to increase the rent to $970. The tenant accepts and renews for one year. What is the residency discount in percentage terms

Answer 1

The residency discount in percentage terms for the sitting tenant is:

= 2.51%.

Step-by-step explanation:

a) Data and Calculations:

Normal apartment rent per month = $955

Determined market rent per month = $995

Charged rent per month = $970

The discount given to the resident tenant = $25 ($995 - $970)

The discount in percentage terms = $25/$995 * 100 = 2.51%

b) The discount in percentage terms is the amount of discount, $25, expressed as a percentage of the newly determined market rent per month. Thus, 2.51% of $995 = $25 ($995 *2.51%). Subtracting $25 from $995 gives $970.