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Real Estate Class > Unit 6: Basic Real Estate Math > Flashcards

Unit 6: Basic Real Estate Math Flashcards

1
Q

Frontage

A

The part of the land that touches the roadway. Will come up with Special Assessment questions.

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2
Q

How many acres in a section?

A

640

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3
Q

How do you convert acres to sqft

A

multiply # of acres by 43560

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4
Q

How do you figure out how many acres you have?

A

Divide sq footage by 43560

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5
Q

Formula for figuring out acres in a section

A

Divide 640 by the bottom number of each fraction in order as they give them to you.
ex: 640 /4 /2 /4

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6
Q

Documentary Stamp Tax

A

Deed, Note, Intangible

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7
Q

Deed Stamp

A
  1. Seller only
  2. Take selling price and divide by 100, round to nearest whole number to find # of stamps.
  3. Multiply that number by .7
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8
Q

Documentary Stamp on Note

A
  1. Buyer only
  2. For new and assumed mortgages
  3. Take mortgate amount, divide by 100 for # of stamps.
  4. Multiply number of stamps x .35
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9
Q

Intangible Tax

A
  1. Only for NEW notes, not assumed
  2. Take amount of new mortgage and multiply by .002.
    For BUYER only
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10
Q

Prorating

A

Certain costs, such as utilities and taxes, are prorated - divided b/t buyer and seller based on days each owns the property.

  • Actual # of days in month, and 365 calendar days are used to calculate
  • Buyer or Seller own closing date, that means the closing date is added to their proration.
  • Property Taxes are paid for the past YEAR
  • Mortgage interest is paid for the last MONTH
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11
Q

Property Tax and Mortgage Interest paid when?

A

Prop tax - For last YEAR
Mort insurance - For last MONTH
Seller is debited, and Buyer Credited that money.
The seller pays the buyer for the days the seller was in the house.

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12
Q

How to prorate Property Tax and Mortgage Interest

A

Take taxes and divide by 365 to find the “per-day” cost.
Multiply Per-Day Cost to the number of days the seller was in the house. That is how much the seller will be debited and the buyer credited.

MORTGAGES - do the same, but for only the MONTH of closing.
You might need to find the interest amount first, so mulitiply the loan amount by the interest rate, then take the number you get, divide it by 365, and multiply that number by the days in the MONTH the seller owns the property.

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13
Q

Rent Proraton

A
  1. Who owns day of closing? If buyer, tack that onto the number of days buyer owns house for that month.
  2. Take total rent for month and divide by # of days in month, for per-day
    Multiply per-day times the number of days that the BUYER OWNS of the month.
  3. Debit the seller and credit the buyer that amount.
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14
Q

Basics of Area and Setbacks

A

Area - LxW
If you have a setback, subtract that and do LxW to find buildable area.
The 640/2/4/4/4 may come up in this part as well

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15
Q

If you see AND in a problem,

A

that means do one side of and and then do the other side of and, and then add them.

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16
Q

Special Assessments and Frontage

A

Frontage - running feet abutting the road.
With a special assessment, you pay when you benefit.
1. Take feet of frontage and multiply times cost per foot to find total cost of paving.
2. Multiply that amount by the percentage you would pay ex: $5000x .55 (55%) for total owner’s cost.
3. DIVIDE BY 2, because you only pay for YOUR SIDE OF THE STREET. They will not tell you this, it is assumed that you know.

17
Q

Commissions

A

A brokerage Fee, (sales commission) is always based on the SALE price (not listing price).
All money flows through the LISTING broker
Selling brokers, also called cooperating brokers, are paid a portion of the total brokerage fee.
Sales associates earn a portion of THEIR broker’s share of the commission. .

18
Q

Find the commissions

A
  1. Total Commission percentage x selling price gets you the total commission.
  2. Then multiply the broker’s percentage against the the total commission.
  3. Then multiply the agent’s percentage against the brokers commission.
19
Q

NET LISTING

A

When a seller NEEDS to make a certain amount, and the Broker NEEDS to hit a certain commission percentge.

  1. Take the amount the seller needs to make: 120,000
  2. Subtract the broker’s percent from 100%
    100% - 5%=95%
  3. Divide the amount the seller needs to make by the remaining commission percentage ex:
    120,000 divided by 95%
    That gives you the listing price.
20
Q

Calculating PERCENTAGE OF PROFIT

A 
A buyer bought a property for 100k, and later sold it for 120k
120k-100k= 20k
Made / Paid
20k/100k
=20% percentage of profit
21
Q

When doing 2/3 and 1/3,

A

First calculate 2 divided by 3, then leave the number on the calculator, and mulitiply it by whatever comes next. Don’t try to round.

22
Q

Loan To Value Ratio Definition

A

Is the max percent of the sales price OR the appraised value, whichever is less, that the lender will lend in a particular case.

23
Q

Loan to Value

A

LTV,
If you see ‘to”, it means divide the first number by the second.
Loan divided by Value

24
Q

LtV = Value

A

Value is loan plus downpayment.

25
Q

IF a lenders LtV is 75%, what is the max mortgage amount on a sale of $92k?

A

Sales Price: 92K MULTIPLEID BY LtV Ratio: .75

Max Loan Amount: %69,000

26
Q

LTV - calculating the loan

A

Do the LVT ratio times the Value.

27
Q

Straight Term Loan

A

360 DAY YEAR
Loan in which the principal is paid back at the end of the term. The interest can be paid monthly, quarterly, yearly, at the end of the term.

28
Q

Straight Term Loan Math

A

Remember - 360 Day Calendar
Principal x intereste rate to get annual interest
Annual Interest divided by 360 days, to get daily intertest amount.
Daily Interest amount x Number of days = total interest paid.
Sometimes they want to know the whole amount paid, so add on the pricincipal.

29
Q

Straight term loan - you have the interest rate and the interest payments, we can figure out the loan

A

Annual Interest divided by interest rate = principal borrowed.

30
Q

Mortgage Qualifiying

A

2 separate processes:
1. Determining buyer’s housing objectives
2. Determining their financial ablilities
RULE OF THUMB - you should borrow no more than 2.5 times your annual income to buy real estate.

31
Q

Income Qualifying Factor

A

2.5 times your annual income

32
Q

Income Qualifying Math

A

What weekly salary would be required to qualify for a $104,000 loan?

  1. Max Loan = 104,000 DIVIDED BY Qualifying Factor of 2.5 gives you annual income requiremet
  2. Divide annual income by 52 weeks in a year
  3. Gives you weekly income

Real Estate Class (12 decks)

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