In evaluating potential tenants for residential rental properties, a landlord may be interested in calculating the ratio of prospective rent to income for the applicant. Given the following information, calculate the rent to income ratio for the applicant. Applicant's Gross Annual Salary (Income): $45,000; Prospective Monthly Rent: $1,000; Applicant's Annual Income Tax and Benefit Payments: $7,650.

Question

Quizplus · Accepted Answer

The rent to income ratio is calculated by dividing the monthly rent by the monthly income. The applicant's monthly income is $45,000 / 12 = $3,750. The monthly rent is $1,000. Therefore, the rent to income ratio is $1,000 / $3,750 = 0.2667, or 26.67%.

In Evaluating Potential Tenants for Residential Rental Properties, a Landlord