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Real Estate Express Final > Math > Flashcards

Math Flashcards

1
Q

Commission Formula

A

Commission = (house selling price) x (commission percentage)

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2
Q

Simple Interest Formula

A

Interest = (principal amount) x (rate of interest) (time)

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3
Q

28/36 Rule or “The Mortgage Rule of Thumb.” Formula

A

Housing costs to qualify for most loans= (gross monthly or annual income) x (.28)

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4
Q

Property Tax Rate

A

Property Tax Rate = (assessed value) x (mill rate)

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5
Q

Assessed Value

A

Assessed Value = (assessment rate) x (market value)

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6
Q

1 mill

A

1 mill = equal to 1/1,000th of a dollar or $1 in property tax.

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7
Q

1 Acre in square feet

A

1 Acre = 43560 square feet

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8
Q

1 Mile in linear feet

A

1 Mile = 5,280 linear feet

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9
Q

1 square yard in square feet

A

1 square yard = 9 square feet

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10
Q

1 cubic yard in cubic feet

A

1 cubic yard = 27 cubic feet

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11
Q

1 square mile in acres & sections

A

1 square mile = 640 acres = 1 section

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12
Q

1 acre in square feet

A

1 acre = 43,560 square feet

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13
Q

Area of triangle

A

1/2 base X height

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14
Q

Area of trapezoid

A

(average of both base lengths) X height

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15
Q

Annual gross rental income

A

(monthly rental income) x (12)

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16
Q

Gross Rent multiplier equations (GRM)

A

Sales price = monthly rental income X GRM

Monthly rental income = sales price / GRM

GRM = sales price / monthly rental income

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17
Q

Gross Income Multiplier equations (GIM)

A

GIM = sales price / annual income

Sales price = annual income X GIM

Annual income = Sales price / GIM

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18
Q

Coast approach formula

A

Value = Land Value + (improvements + capital additions - depreciation)

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19
Q

Depreciation

A

Annual depreciation = beginning depreciable basis / depreciation term (number of years)

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20
Q

Depreciable basis

A

Initial property value + any capital improvements - land value

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21
Q

Income capitalization approach

A

Value = annual net operating income / capitalization rate

Capitalization rate = annual net operating income / value

Annual net operating income = value X capitalization rate

22
Q

Net operating income (NOI)

A

NOI = potential gross income - vacancy loss + other income - operating expenses

23
Q

Interest rate equation

A

interest rate = annual payment / loan amount

24
Q

Interest only loan

A

Total interest - loan amount X rate X term in years

25
Q

Fully amortized loan

A

Total interest = (monthly PI payment X 12 X term) - loan amount

26
Q

Amortization calculation

A

Step 1: Principle X Interest = annual interest

Step 2: Annual interest / 12 months = 1st month’s interest

Step 3: Monthly payment - 1st (or any) month’s calculated interest = principle paid

Step 4: Principle balance - principle paid = new principle balance

27
Q

Loan constants

A

Monthly Payment = (loan amount / 1000) X loan constant

Loan amount = (Monthly payment / loan constant) X 1000

Loan constant = (Monthly payment / loan amount) X 1000

28
Q

Loan to value ratio (LTV)

A

LTV ratio = loan / Price (value)

Loan = LTV ratio X price (value)

Price (value) = Loan / LTV ratio

29
Q

Income ratio qualification

A

Debt ratio = (housing expenses + other debt payment) / monthly gross income

Housing expenses = (monthly gross income X debt ratio) - other debt payments

30
Q

Appreciation

A

Total appreciation = current value - original price

Total appreciation rate = total appreciation / original price

Average annual appreciation rate = total appreciation rate / number of years

One year appreciation rate = annual appreciation amount / value at beginning of year

Appreciated value = beginning value X (1 + annual rate) X (1 + annual rate) … for the number of years in question

31
Q

Rate of return

A

Rate = income / value

Value = income / rate

income = value X rate

32
Q

Equity

A

Equity = current market value - current loan balance

33
Q

Net operating income (NOI)

A

**The gross income minus all operating expenses

NOI = potential rent - vacancy loss + other income - operating expenses

34
Q

Cash flow

A

**The mount of money moving in and out of a business in a month

Cash flow = (NOI - debt services) where debt services is PI payment

35
Q

Capital gains and adjusted basis

A

Capital gain = amount realized - adjusted basis, where amount realized = sales price - selling costs

Adjusted basis = beginning basis + capital improvements - total depreciation

Total depreciation = (beginning depreciable basis / depreciation term in years) X years depreciated

Depreciable basis = initial property value + capital improvements - land value

36
Q

Tax liability

A

Tax liability = (NOI + reserves - interest expense - depreciation) X tax bracket

37
Q

Return on investment

A

**The ratio between the net profit and the cost of investment

ROI = NOI / Price

38
Q

Return on equity

A

**The ratio between the cash flow and equity in a property

ROE = Cash flow / equity

39
Q

Percentage lease rent

A

**When the landlord receives a percentage of gross sales or net profit as the rental payment for a property

Monthly percentage rent = sales times % sales charged

40
Q

Rent escalation

A

**A way to determine the dollar amount of a rent increase

New rent = current rent X (100% + escalation rate)

41
Q

Mill rates

A

**One tenth of one cent

1 mill = $.001

A mill rate of 1 mill per $1000 = .1%

A 1% tax rate = 10 mills

Tax = (taxable value / 1000) X mill rate

42
Q

Tax base

A

**Total tax assessed value of all real property in a particular jurisdiction

Tax base = assessed valuations - exemptions

43
Q

Tax rate, base, and requirement

A

Tax rate = Tax requirement / tax base

Tax base = tax requirement / tax rate

Tax requirement = Tax base X rate

44
Q

Commission splits

A

Total commission = sales price X commission rates

Co-brokerage split = total commission X co-brokerage percent

Agent split = Co-brokerage split X agent percent

Broker split = Co-brokerage split - agent split

45
Q

Seller’s Net

A

**The amount the seller profits after paying the expenses involved in the sale (commission rate, closing costs, and any existing mortgage)

Seller’s net = sales price - (sale price X commission) - other closing costs - loan balance

46
Q

Minimum contract price

A

**Lowest amount the seller can sell the property for and still cover all of his expenses (commission, closing costs, and existing mortgage) and receive the desired proceeds at closing

Minimum contract price = (Desired seller’s net profit + loan payoff + closing costs = seller’s gross profit) dividid by seller’s %

**In this case “seller’s %” is 100% minus the commission percent

47
Q

Percentage of listing price calculation

A

**It’s a ratio of the offer to the listing price

Percentage of listing price = offer / listing price

48
Q

Earnest money deposit calculation

A

**Used to determine an appropriate amount of earnest money to include with an offer

Deposit = offering price X required or market-accepted percentage

49
Q

Closing cost prorations

A

Monthly amount = annual amount / 12

Daily amount = monthly amount / 30

Proration = (monthly amount multiplied by the # of months) + (daily amount multiplied by the # of days)

50
Q

365 day method of prorations

A

Daily amount = annual amount / 365 OR monthly amount / length of month

Real Estate Express Final (3 decks)

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