Math

Question 1

Gross Rent Multiplier (GRM)

Answer 1

Price / Monthly Rent

Question 2

Calculating Area from the Legal Description

Answer 2

1. First multiply all the denominators of the fractions

2. Then do 640 divided by the denominators

Question 3

Gross Income Multiplier (GIM)

Answer 3

Sales price / annual income

Question 4

Depreciation Formula

Answer 4

Depreciable Basis = (Initial Property Value + Improvements - Land Value)

Annual Depreciation = Beginning Depreciable Basis / Depreciation Term

Question 5

Points Formula

Answer 5

1 point = 1% of the loan amount or .01 x loan amount
Points = Fee Paid / Loan Amount

Rules of Thumb
1 point charged raises lender’s yield by .125%
8 points charged raises lender’s yield by 1%

Question 6

Total Interest Calculation for an Interest-Only & Amortized Loan

Answer 6

Interest Only Loan:
Total Interest = Loan Amount x Rate x Terms in Years

Amortized Loan:
Total interest = (Monthly PI Payments x 12 x term) - Loan Amount