Question

One unit of a triplex is owner occupied and the other two units are leased at $1,000 per month each. Current market rents for similar units is $1,200 per month. In this example the PGI of the triplex is ____________ per month for the leased units and _______________ per month for the owner occupied unit.

a. $1,800, $1,200
b. $3,200, $2,000
c. $3,200, $1,200
d. $2,000, $1,200

Answer 1

The Potential Gross Income (PGI) for the leased units of the triplex is $1,800 per month, and for the owner-occupied unit is $1,200 per month, which is option a. $1,800, $1,200.

option a is the correct

Step-by-step explanation:

The student's question relates to calculating the Potential Gross Income (PGI) of a triplex property, which includes an analysis of the income from rented units as well as the implied rental value of the owner-occupied unit. PGI represents the total amount of income that a property would generate if it were fully rented at market rates.

If two units are leased at $1,000 per month, the total income from these units is $1,000 x 2 = $2,000 per month. Since the market rent for similar units is $1,200 per month, if the owner-occupied unit were leased out, it would also generate $1,200 per month. Therefore, the PGI is $2,000 per month for the leased units and $1,200 per month for the owner-occupied unit.

The correct answer to the student's question is: a. $1,800, $1,200.