Math Calculations

Question 1

Variable Lease Calculation

Answer 1

New Index divided by the Old Index. Multiple by original rent.

unit rents $12/sq ft. with an index of 1.5 what is the new rent rate when the Consumer Price Index increases to 1.8?

1. 8 divided by 1.5 = 1.2
2. 2 x $12 = $14.40

Question 2

Equity Calculation (Different between Value and Mortgage debt)

Answer 2

Balance 325k value 400k how much equity

400-325 = 75k

Question 3

PITI

Answer 3

Principal, interest, taxes and insurance. Be careful to not mix a monthly with an annual number.

Question 4

Lender’s Discount points yield

Answer 4

each point paid increases the yield by 1/8% to the stated interest.

Lender charges 2 discount points on a 120k loan at 6%.
2/8ths + 6% = 6 1/4% yield

Question 5

Discount point cost to borrower

Answer 5

Each point is 1% of LOAN AMOUNT.

120K loan. whats the cost of 2 points? = 120k * .002 = 2400

Question 6

LTV Calculation (Loan to value)

Answer 6

Loan amount divided by Value = LTV Ratio

234k loan on a 260k value home
234/260 = .9 or 90% LTV

Lender will do 80% LTV on a 150k home = Whats the loan amount? 150k * .8 = 120k

Question 7

Acreage Calculation in a tract if there is an AND in the description calculate each side seperately then add them together

Answer 7

SW 1/4, NE 1/4, SE 1/4, NW 1/4, of Sec 12, T3S, R4E
640 = Acres in a Section

640 / 4 / 4 / 4 / 4 = 2.5 acres

Question 8

a lot is 1/8 of a mile by 1/4 mile. how many acres?

Answer 8

1 mile = 5280 ft and 1 acres = 43,560 sq ft
5280 / 8 = 660 ft
5280 / 4 = 1320 ft
660*1320 = 871,200 sq ft
871,200 / 43,560 = 20 Acres

Question 9

Occupancy Rate

Answer 9

Occ units / Total units

200 rented / 250 total = .8 or 80%

Question 10

Adjusted Sale Price Calculation

Answer 10

comp sold for 30 k in better area but is smaller
5k different for neighborhood
4k in size
30k - 5k + 4 k = 29k

Question 11

Reconciliation Calculation

Answer 11

Comp a 255k * .35 = 89,250
Comp b 262k * .2 = 52,400
Comp c 250k * .45 = 112,500
total = 254,150 average

Question 12

Accrued Depreciation Formula

Answer 12

The effective age of the property / Total real age * new reproduction cost = Accrued Depriciation

Question 13

Accrued Depreciation Formula

Answer 13

The effective age of the property / Total economic life (expected period of time during which an asset remains useful to the average owner) * new reproduction cost = Accrued Depreciation

Reproduction cost 207,700 effective age 4 yrs. economic life 60 yrs

4/60=.0666666 * 207,700k = 13,847

Question 14

Accrued depreciation formula 2

Answer 14

Reproduction cost / total age = annual depreciation

annual depreciation x effective age = accrued depreciation

Question 15

Annual Depreciation

Answer 15

Reproduction cost / total age = annual depreciation

Question 16

Effective Gross Income

Answer 16

Potential income - losses + other income

Question 17

Net Operating Income

Answer 17

Effective gross income - operating expenses

Question 18

IRV Formula
I = NOI
R = CAP RATE
V = VALUE

Answer 18

CAP RATE X VALUE = NOI
NOI / VALUE = CAP RATE
NOI / CAP RATE = VALUE

What is the value of a property with NOI 60k if the market cap rate is 10% = 60k / .1 (10%) or * 10 = 600,000 VALUE

Find cap rate of NOI 57,600 VALUE OF 720,000
57600 / 720000 = .08 OR 8 % CAP RATE

VALUE 1,200,00 CAP RATE 12% FIND NOI
.12 * 1,200,000 = 144,000 NOI

Question 19

How to find Estimated Market Value Based on Gross Market Multiplier (GRM)

Answer 19

Sale Price / Monthly rent

Comp 1: 120,400 / 1225 = 98.29
Comp 2: 126,000 / 1275 = 98.82 
Comp 3 132,000 / 1350 = 97.78
Add / 3 = 98.3 Market GRM
1200 rent x 98.3 GRM = $117,960 Value

Question 20

Annual Interest paid to the lender

Answer 20

125k loan balance @ 5 and 3/4 % rate

125k * .0575 = $7,187.50

Question 21

Profit Formula

Answer 21

Amount made / total cost = % Profit

lot cost 28k sold for 35k
35-28 = 7k
7k / 28k = .25 or 25% profit

Question 22

loss formula

Answer 22

the amount lost on sale / total cost
Cost 125k sold for 100k
100k - 125k = -25k
-25k / 125k = .20 or 20 % loss

Question 23

Proration for assumed loan calculation

Answer 23

Balance 110,350 @ 4%. Closing day is April 10 mortgage payment due May 1.

110,350 * .04 = 4414
4414 / 365 = 12.93 per day
12.93 * 9 days = 108.84 debit to seller credit to buyer

Question 24

FL state transfer tax

Answer 24

Doc Stamps on DEEDS
.70 per $100 of sale price
Doc Stamps on PROMISSORY NOTES
.35 per $100 
State INTANGIBLE TAX ON MORTGAGE
.002 PER $1 BORROWED

House sells for 150,025
150,025 / 100 = 1500.25 or 1501 x .7 = 1050.70 for DEED

150,025 / 100 = 1500.25 or 1501 x .35 = 525.35 for Prom Note

Borrowed 125,000 * .002 = $250

Question 25

Calculating HER for Conventional Mortgage Qualifications MAX 36% TOR

Answer 25

Monthly housing expenses (PITI) / MONTHLY GROSS INCOME = HER (Housing Expense Ratio)

PITI & DEBT 1470 / 5880 INCOME = .25 OR 25%

Question 26

Amortizing a mortgage Calculation

Answer 26

Principal * Annual interest / 12 for 1st months interest
monthly payment - 1st months interest is the amount to principal
Beginning balance - amount to principal = new principal

repeat steps with new principal to get next months payment and so forth