# GENERAL MATH PROBLEM CATEGORIES AND ILLUSTRATED SOLUTIONS MEASUREMENT STANDARDS WHICH MUST BE MEMORIZED FOR THE BROKER TEST

Size: px
Start display at page:

Download "GENERAL MATH PROBLEM CATEGORIES AND ILLUSTRATED SOLUTIONS MEASUREMENT STANDARDS WHICH MUST BE MEMORIZED FOR THE BROKER TEST"

Transcription

1 Chapter 17 Math Problem Solutions CHAPTER 17 GENERAL MATH PROBLEM CATEGORIES AND ILLUSTRATED SOLUTIONS MEASUREMENT STANDARDS WHICH MUST BE MEMORIZED FOR THE BROKER TEST Linear Measure 12 inches = 1 ft 3 ft = 1 yd 5,280 ft = 1 mile 640 acres = 1 sq mile 1 sq mile = 1 section 36 sections = 1 township Square Measure 144 sq inches= 1sq ft 9 sq ft = 1 sq yd 43,560 sq ft = 1 acre Cubic Measure 27 cubic feet = 1 cubic yard Tax Valuation X Dollars Per \$100 AV = X/100 = Tax Rate Divide the AV by 100, then multiply by X Dollars X Mils Per \$1 AV Divide the AV by 1000, then multiply by X Mils Area Formulas Formula for rectangle: Formula for square: Formula for triangle: MATHEMATICS Percentages a r e a a r e a a r e a === = l e n g t h x w i d t h = s i d e x s i d e = base X height X 0.5 To use a percentage in an arithmetic calculation, change the percentage to its decimal equivalent. The rule for changing a percentage to a decimal is to remove the percent sign and move the decimal point two places to the left (or divide the percentage by 100). Examples of converting a percentage to a decimal are: 98% = / 2 % = 1.5% = % = / 4 % = 1.25% = % = / 4 % = 0.75% =

2 Chapter 17 Math Problem Solutions To change a decimal or a fraction to a percentage, simply reverse the procedure. Move the decimal point two places to the right and add the percent sign (or multiply by 100). Some examples of this operation are: 1.00 = 100% 0.90 = 90% = 0.75% 1 / 2 = 1 2 = 0.5 = 50% 3 / 8 = 3 8 = = 37.5% 2 / 3 = 2 3 = = 66.7% Commission Problems Problems involving commissions are readily solved by the Formula: sales price X rate of commission = total commission Sales 1. A real estate broker sells a property for \$90,000. Her rate of commission is 7%. What is the amount of commission in dollars? Product Missing = multiply Solution Step 1 - sales price x rate = commission Calculation \$90,000 x 0.07 = \$6,300 Answer: \$6,300 commission 2. A real estate broker earns a commission of \$6,000 in the sale of a residential property. His rate of commission is 6%. What is the selling price? Factor Missing = Divide Solution Step 1 - sales price = commission dollars divided by commission rate Calculation \$6000/.06 = \$100,000 Answer: \$100,000 sales price 3. A real estate broker earns a commission of \$3,000 in the sale of property for \$50,000. What is her rate of commission? Factor missing = divide Solution Step 1 - commission dollars divided by sales price = rate of commission Calculation \$3,000/50,000 = 6% Answer = 6% commission rate Rentals 1. A real estate salesperson is the property manager for the owner of a local shopping center. The center has five units, each renting for \$24,000 per year. The center has an annual vacancy factor of 4.5%. The commission for rental of the units is 9% of the gross rental income. What is the commission for the year? Solution Step 1 Actual Occupancy Rate = 100% - Vacancy Rate Calculation - 100% % = 95.5% = Actual Occupancy Rate Solution Step 2 Actual Rent Dollars = Potential Gross Rent x Occupancy Rate Calculation = \$120,000 x 95.5% = \$114,600 Solution Step 3 - Actual Rent x Commission Rate = Commission Dollars 444

3 Chapter 17 Math Problem Solutions Calculation \$114,600 x 9% = \$10,314 = Commission Dollars Answer: \$10,314 commission Commission Splits 1. A real estate broker sells a property for \$65,000. The commission on this sale to the real estate firm with whom the broker is associated is 7%. The broker receives 60% of the total commission paid to the real estate firm. What is the firm's share of the commission in dollars? Solution Step 1 Selling Price x Commission Rate = Commission Dollars Calculation - \$65,000 x 7% = \$4,550 Solution Step 2 Total Commission x Share Percentage = Share Dollars Calculation - \$4,550 x 60% = \$2,730 Answer: \$2,730 Estimating Partial Sales of Land 1. A subdivision contains 400 lots. If a broker has sold 25% of the lots and his sales staff has sold 50% of the remaining lots, how many lots are still unsold? Solution Step 1 Original Number of Lots x Percentage Sold by Broker = Number of Lots Remaining Calculation 400 x 25% = 100 lots. 400 Lots minus 100 Lots = 300 Lots Solution Step 2 Remaining Lots x % Sold by Sales Force = Number of lots Sold by Agents Calculation 300 x 50 % = 150 Lots Solution Step 3 Add the number of lots sold Calculation = 250 Solution Step 4 Original Number of Lots less the Number of Lots Sold = Number of Lots Remaining Calculation = 150 Answer: 150 lots still unsold Profit/Loss on Sale of Real Estate The formula for profit is: investment X percent of profit = dollars in profit The formula for loss is: investment X percent of loss = dollars lost 1. Mr. Wong buys a house for investment purposes for \$48,000. He sells it six months later for \$54,000 with no expenditures for fix-up or repair. What is Mr. Wong's percentage of profit? Solution Step 1 Sales Price less Original investment = Profit Dollars Calculation = \$54,000 - \$48,000 = \$6,000 Solution Second Step Profit Dollars divided by Original Investment Dollars = % Profit Calculation = \$6,000/\$48,000 = 12.5% Answer: 12.5% Profit 445

4 Chapter 17 Math Problem Solutions 2. Ms. Clary purchases some property in 1987 for \$35,000. She makes improvements in 1988 costing her \$15,500. In 1990 she sells the property for \$46,000. What is her percentage of loss? Solution Step 1 Purchase Price Plus Improvements = Current Investment Calculation = \$35,000 + \$15,500 = \$50,500 Solution Step 2 Investment less Selling Price = Loss Calculation = \$50,500 - \$46,000 = \$4,500 loss Solution Step 3 = Loss divided by Investment = Percent Loss Calculation = \$34,500/\$50,500 = 8.91% Answer: 8.91% AREA CALCULATIONS Acreage 1. An acre of land has a width of 330 feet. If this acre of land is rectangular in shape, what is its length? (Each acre contains 43,560 square feet.) Solution Step 1 An Acre has 43,560 square feet Solution Step 2 If Length x Width = Area then Length = Area/Width Calculation = Length = 43,560/330 = 132 feet Answer: 132 foot long lot 2. If a parcel of land contains 32,670 square feet, what percent of an acre is it? Solution Step 1 43,560 square feet in an Acre Solution Step 2 Part of Area divided by the Total Area = % area Calculation 32,670 square feet / 43,560 = 75% of an acre Answer: 75% of an acre Square Footage 1. A rectangular lot measures 185 feet by 90 feet. How many square feet does this lot contain? Solution Step 1 = Length x width = Area Calculation = 185 x 90 = 16,650 square feet Answer: 16,650 sq ft area 2. A room measures 15 feet by 21 feet. We want to install wall-to-wall carpeting and need to calculate the exact amount of carpeting required. Solution Step 1 Carpeting sold by square yard, so need answer expressed in square yards Solution Step 2 Calculate Area of Carpet in square feet Length X Width = Area Calculation 15 x 21 = 315 square feet. Solution Step 3 = Convert square feet to square yards 9 square feet in a square yard (3 x 3) Calculation = 315 square feet/9 = 35 square yards Answer: 35 square yards 3. A new driveway will be installed, 115 feet by 20 feet. The paving cost is \$0.65 per square foot. What will be the minimum cost to pave the new driveway? Solution Step 1 Length X Width Area Calculation 115 x 20 = 2,300 square feet Solution Step 2 Cost of paving driveway - \$0.65 per square foot Area X Cost/SF = Price Calculation 2,300 x.65 per square ft = \$1,495 Answer: \$1,

5 Chapter 17 Math Problem Solutions 4. A house measures 28 feet wide by 52 feet long and square foot? Solution step 1 Length X Width = Area Calculation 28 x 52 = 1,456 square feet Solution Step 2 - Area x Price per sf = Selling Price Solution Step 3 - Price per sq. ft. = Selling Price/sf Calculation - \$64,000/1,456 = \$43.96 = Price per sf Answer: \$43.96/sq per ft sq ft sells for \$64,000. What is the price per Cost/Size 5. A triangular lot measures 200 feet along the street and 500 feet in depth on the side perpendicular to the front lot line. If the lot sells for 10 cents per square foot, what is the selling price? Solution Step 1 - Area of a Triangle = Length X Width divided by 2 Calculation (200 x 500)/2 = 50,000 square feet Solution Step 2 Area x Price per sq ft. = Sales Price Calculation 50,000 x \$0.10 = \$5,000 = Sales Price Answer: \$5,000 Sales Price Tax Problems 1. If the assessed value of the property is \$80,000 and the tax value is 100% of the assessed value, what is the annual tax if the tax rate is \$1.50 per \$100 and the equalization factor is 1.5? Solution Step 1 Assessed Value X Equalization Factor = Equalized Assessed Value Calculation - \$80,000 x 1.5 = \$120,000 = Equalized Assessed Value Solution Step 2 Equalized Assessed Value times \$1.50/100 = Tax Bill Calculation - \$120,000 x \$1.50 = \$180,000/100 = \$1,800 Tax Bill Answer: \$1,800 annual taxes 2. A property sells at the assessed value. The annual real property tax is \$ at a tax rate of \$1.15 per \$100 of tax value, with an equalization factor of 1.2. The property is taxed at 80% of assessed value. What is the selling price? Solution Step 1 - assessed value = taxes/tax rate Calculation X = \$706.56/\$1.15/\$100 = \$ x 100/\$1.15 = \$61,440 Solution Step 2 Assessed value divided by the equalization factor = Equalized Assessed Value Calculation - \$61,440/1.2 = \$51,200 = Equalized Assessed Value Solution Step 1 Equalized Assessed value divided by the Assessment Rate = Selling Price Calculation - \$51,200/.8 = \$64,000 = Selling Price Answer: \$64,000 is selling price 3. If the assessed value of property is \$68,000 and the annual tax paid is \$1,105 and the equalization factor is 1.3, what is the tax rate? Solution Step 1 Assessed Value x Equalizer = Equalized Assessed Value Calculation = \$68,000 x 1.3 = \$88,400 Solution Step 2 Tax Dollars divided by the Equalized Assessed Value x 100 = Tax Rate Calculation - \$1,105/\$88,400 = \$1.25 Per \$100 of Tax Value Answer: tax rate \$1.25 per \$100 of tax value 447

6 Chapter 17 Math Problem Solutions 4. If the market value is \$70,000, the tax rate is 120 mills, and the equalization factor is 1.5, and the assessment is 80%, what is the semiannual tax bill? (To get mills, divide by 1000). Solution Step 1: Market Value x Assessment rate = Assessed Value Calculation - \$70,000 x.8 = \$56,000 Solution Step 2 Assessed Value x Equalizer = Equalized Assessed Value Calculation - \$56,000 x 1.5 = \$84,000 Solution Step 3 Equalized Assessed Value divided by 120 mills/\$1000 = Annual Tax Bill Calculation \$84,000/1000 = x 120 = \$10,080 Annual Tax Bill Solution Step 4 Annual Tax Bill/2 = Semiannual Tax Bill Calculation - \$10,080/2 = \$5, 040 Semiannual Tax Bill Answer: \$5,040 semiannual tax bill TRANSFER TAX CALCULATIONS The conveyance in Illinois is taxed as a result of the Illinois Real Estate Transfer Tax Act. The amount subject to taxation is the sales price minus any assumed mortgage or mortgage taken "subject to." State tax - \$0.50 per \$500 or fraction thereof, County tax - \$0.25 per \$500 or fraction thereof If the total amount of consideration is less than \$100 no tax is required. 1. A property sold for \$125,000. The purchaser assumed a mortgage on the property in the amount of \$37,450. What is the total amount of transfer tax? Solution Step 1-Sales price minus assumed mortgage = taxable amount Calculation - \$125,000 - \$37,450 = \$87,550 Solution Step 2 Taxable units = Each 500 and then any Fraction of 500 Calculation - \$87,500/500 = 175 plus another unit for the \$50 left over = 176 units Solution Step 3 State Tax = Number of Units x \$0.50 Calculation 176 x \$0.50 = \$88.00 Solution Step 4 = County Tax = Number of Units x \$0.25 Calculation 176 x \$0.25 = \$44.00 Solution Step 5 Total Transfer Tax = State Tax plus County Tax. Calculation = \$ = \$ Answer: \$132 total amount of transfer tax PRORATIONS AT CLOSING Proration Rules day Standard Month day standard Year 3. Seller is in possession of the property on the day of closing 448

7 Chapter 17 Math Problem Solutions 1. In preparing a statement for a closing to be held August 14, a real estate broker determines that the annual real property taxes in the amount of \$360 have not been paid. What will the broker put in the buyer's statement as her entry for real property taxes? Solution Step 1 Determine the monthly Tax Amount Calculation - \$360/12 = \$30 per month Solution Step 2 Determine the Daily Tax Amount Calculation - \$30/30 = \$1 per day Solution Step 3 = Determine the Total Monthly Taxes Owed Calculation - \$30 X 7 (through July) = \$210 Solution Step 4 Determine the Total Monthly Taxes for the month of closing Calculation - \$1 x 14 = \$14 Solution Step 5 Add the total Tax Amount Calculation - \$210 + \$14 = \$224 Answer: \$224 buyer credit (this is the seller's share of the real property taxes to cover the 7 months and 14 days of the tax year during which he owned the property). FINANCIAL CALCULATIONS Simple Interest Interest calculations use the formula: loan balance X rate of interest = annual interest 1. A loan of \$15,000 is repaid in full, one year after the loan is made. If the interest rate on the loan is 12.5%, what amount of interest is owed? Solution Step 1 Principle x interest rate = interest dollars Calculation - \$ 15,000 x 12.5% = \$1,875 Interest Dollars Answer: \$1,875 interest Principal and Interest 2. On October 1, a mortgagor makes a \$300 payment on her mortgage, which is at the rate of 10%. Of the \$300 total payment for principal and interest, the mortgagee allocates \$200 to the payment of interest. What is the principal balance due on the mortgage on the date of the payment? Solution Step 1 Monthly Interest x 12 = Annual Interest Calculation - \$200 x 12 = \$2,400 Solution Step 2 Annual Interest Dollars divided by Interest Rate = Principal Calculation - \$2,400/10% (.10) = \$24,000 - Principal Answer: \$24,000 mortgage balance on date of payment 3. If an outstanding mortgage balance is \$16, on the payment date and the amount of the payment applied to interest is \$150, what is the rate of interest charged on the loan? Solution Step 1 Monthly Interest x 12 = Annual Interest Calculation - \$150 X 12 mo = \$1,800 annual interest Solution Step 2 - Principal x Rate = Interest Dollars Rate = Interest Dollars/Principal Calculation - \$1,800/16, = 11% Interest Rate 449

8 Chapter 17 Math Problem Solutions Debt Service 1. A mortgage loan of \$50,000 at 11% interest requires monthly payments of principal and interest of \$ to fully amortize the loan for a term of 20 years. If the loan is paid over the 20-year term, how much interest does the borrower pay? Solution Step 1 Monthly Principal & Interest pmts x 12 = Annual Princ & Int Pmts Calculation - \$ x 12 = \$6, Solution Step 2 Annual P&I x 20 = Total 20 year principal & interest pmts Calculation - \$6, x 20 = \$123,864 Solution Step 3 Total P&I Pmts less Original Loan = Interest Dollars Calculation - \$123,864 - \$50,000 = \$73,864 Answer: \$73,864 interest paid Fees and Points The formula for calculating the dollar amount owed in points on a loan is: loan X number of points (percentage) = dollars in points 1. A house sells for \$60,000. The buyer obtains an 80% loan. If the bank charges 3 points at closing, how much in points must the buyer pay? Solution Step 1 Determine the loan Amount Selling Price x LTV Calculation - \$60,000 x80% = \$48,000 Loan Solution Step 2 Multiply points times Loan = Point Payment Calculation - \$48,000 x 3% (.03) = \$1,440 Points Payment Answer: \$1,440 points payment 2. Mr. and Mrs. Schmidt borrow \$64,000. If they pay \$4,480 for points at closing, how many points are charged? Solution Step 1 Divide the Point Dollars by the Loan Dollars = Percent of Loan Calculation - \$4,480/\$64,000 = 7% Solution Step 2 Each Percentage of the loan equals 1 point Calculation 7% = 7 Points Answer: 7 points 3. Mr. and Mrs. Ortega borrow \$55,000 at 11% interest for 30 years. The bank requires 2 months interest to be placed in escrow and a 1% loan origination fee to be paid at closing. What is the amount of interest to be escrowed? What is the amount charged for the loan origination fee? Solution Step 1 Annual interest = Principal x Interest Rate Calculation - \$55,000 x 11% = \$6,050 Annual Interest Solution Step 2 Annual interest divided by 12 = monthly interest Calculation - \$6,050/12 = \$ Monthly Interest Solution Step 3 2 x monthly interest = Two Months Interest Escrow Calculation 2 x \$ = \$1, Interest Escrow Answer 1: \$1, interest escrow Solution Step 1 Loan times Origination Fee Percentage = Origination Fee Dollars Calculation \$ 55,000 x 0.01 = \$ Loan origination fee Answer: \$550 loan origination fee 450

9 Chapter 17 Math Problem Solutions Loan-to-Value Ratios 1. In problem 8 above, the appraised value of the home purchased is \$68,750. What is the loan-to-value ratio? Solution Step 1 Loan divided by Selling Price = Loan to Value Ratio Calculation - \$55,000/68,750 = 80% Loan to Value Ratio Answer: 80% loan-to-value ratio Yields The percentage of profit is called the yield of the loan. Yields on loans are increased by points paid at closing. Each point charged has the effect of raising the interest rate 1/8 percent. 1. The First Bank lends \$100,000 to the borrower and charges 3 points at closing. The interest rate on the loan is 12% for 25 years. What is the bank's effective yield on the loan? Solution Step 1 Each point raises Yield by 1/8% - Multiply 3 points by 118% Calculation 3 x 1/8 = 3/8% Solution Step 2 Convert 3/8 fraction to decimals Divide 3 by 8 Calculation 3/8 = 0.375% Solution Step 3 Add original Interest and Point Equivalent interest to get total interest Yield Calculation 12% +.375% = % Yield Answer: % Yield Qualifying for a Loan The typical housing debt-to-income ratio for conventional loans is 25-28%. The typical total debt-toincome ratio for conventional loans is 33-36%. The 25-28% means that for the borrower to qualify, PITI (principal, interest, taxes, insurance) must not be more than 25-28% of the borrower's monthly gross income. The 33-36% means that for the borrower to qualify, the total monthly expenses (including housing expense) must not be more than 33-36% of the borrower's monthly gross income. 1. Mr. and Mrs. Jones have a combined total monthly income of \$2,500. If the lender requires a debt-to-income ratio of 25:33 for housing and total expenses, what is the maximum house payment the Joneses will qualify for? What is the maximum total monthly expenses besides PM that will be allowed? Solution Step 1 Calculate 25% of the Gross monthly Income for PITI Calculation - \$2,500 x 25% (.25 ) = \$625 PITI Solution Step 2 Calculate 33% of the Gross Monthly Income for Total Debt Calculation - \$2,500 x 33% (.33) = \$825 Total Debt Solution Step 3 Subtract the PITI Dollars from the Total Debt Dollars = Other Debt Calculation - \$825 - \$625 = \$200 for other debt Answer: \$200 for other debt 451

10 Chapter 17 Math Problem Solutions Appraisal Calculations Capitalization, income approach, Cap Rate Approach Under the income approach, the estimate of value is arrived at by capitalizing the annual net income. The solution to these problems is based on the following formula: Value X Capitalization rate = Net Operating Income 1. An apartment building produces a net income of \$4,320 per annum. The investor paid \$36,000 for the apartment building. What is the owner's rate of return (cap rate) on the investment? Solution Step 1 Value X Cap Rate = Net Operating Income so Net Operating Income/Value = Cap Rate Calculation - \$4,320/\$36,000 = 12% Cap Rate Answer: 12% annual rate of return on investment cap rate 2. An investor is considering the purchase of an office building for \$125,000. The investor insists upon a 14% return on investment. What must be the amount of the annual net income from this investment to return a profit to the owner at a rate of 14%? Solution Step 1 - Value X Cap Rate = Net Operating Income Calculation - \$125,000 x 14% (.14) = \$17,500 Net Operating Income Answer: \$17,500 net operating income needed 3, In appraising a shopping center, the appraiser establishes that the center produces an annual net income of \$97,500. The appraiser determines the capitalization rate to be 13%. What should be the appraiser's estimate of market value for this shopping center? Solution Step 1 - Value X Cap Rate = Net Operating Income so Value = Net Operating Income/Cap Rate Calculation \$97,500/13%(.13) = \$750,000 Answer: \$750,000 market value Basis 1. Mr. and Mrs. Swift purchased their home 15 years ago for \$32,500. During their ownership, they made capital improvements totaling \$19,400. They sold the home for \$72,900. What amount of gain did they make on the sale? Solution step 1 Purchase Price Plus Improvements = Basis Calculation - \$32, ,400 = \$51,900 Basis Solution Step 2 Selling Price less Basis = Gain/Profit Calculation - \$72,900 less \$51,900 = \$21,000 Gain/Profit Answer: \$21,000 gain/profit 452

11 Chapter 17 Math Problems & Answers CHAPTER 17 - MATH QUESTIONS 1. The value of your house, not including the lot, is \$91,000 today. What was the original cost if it has depreciated 5 percent per year for the past seven years? A. \$67, B. \$95, C. \$122, D. \$140, What did the owners originally pay for their home if they sold it for \$98,672, which gave them 12 percent profit over their original cost? A. \$86,830 B. \$88,100 C. \$89,700 D. \$110, What would you pay for a building producing \$11,250 annual net income and showing a minimum rate of return of 9 percent? A. \$125,000 B. \$123,626 C. \$101,250 D. \$122, An owner agrees to list his property on the condition that he will receive at least \$47,300 after paying 5 percent broker's commission and paying \$1,150 in closing costs. At what price must it sell? A. \$48,450 B. \$50,815 C. \$50,875 D. \$51, A gift shop pays rent of \$600 per month plus 2.5 percent of gross annual sales in excess of \$50,000. What was the average monthly rent last year if gross annual sales were \$75,000? A. \$1, B. \$ C. \$ D. \$

12 Chapter 17 Math Problems & Answers 6. If your monthly rent is \$1,050, what percent would this be of an annual income of \$42,000? A. 25 percent B. 30 percent C. 33 percent D. 40 percent 7. Two managing brokers split the 6 percent commission on a \$73,000 home. The selling licensee was paid 70 percent of his broker's share. The listing licensee was paid 30 percent of her broker's share. How much did the listing licensee receive? A. \$657 B. \$4,380 C. \$1,533 D. \$1, The buyer has agreed to pay \$175,000 in sales price, 2.5 loan discount points, and a 1 percent origination fee. If the buyer receives a 90 percent loan-to-value ratio, how much will the buyer owe at closing for points and the origination fee? A. \$1, B. \$3, C. \$5, D. \$6, Calculate eight months of interest on a \$5,000 interest-only loan at 9.5 percent. A. \$ B. \$ C. \$ D. \$ A 100-acre farm is divided into lots for homes. The streets require one - eighth of the whole farm, and there are 140 lots. How many square feet are in each lot? A. 43,560 B. 35,004 C. 31,114 D. 27, What is the monthly net income on an investment of \$115,000 if the rate of return is 12.5 percent? A. \$1, B. \$1, C. \$7, D. \$14, A licensee sells a property for \$58,500. The contract he has with his managing broker is 40 percent of the full commission earned. The commission due the managing broker is 6 percent. What is the licensee's share of the commission? A. \$2,106 B. \$1,404 C. \$3,510 D. \$2,

13 Chapter 17 Math Problems & Answers 13. What is the interest rate on a \$10,000 loan with semiannual interest of \$450? A. 7 percent B. 9 percent C. 11 percent D percent 14. A warehouse is 80 feet wide and 120 feet long with ceilings 14 feet high. If 1,200 square feet of floor surface has been partitioned off from floor to ceiling for an office, how many cubic feet of space will be left in the warehouse? A. 151,200 B. 134,400 C. 133,200 D. 117, The lot you purchased five years ago for \$30,000 has appreciated 3.5 percent per year. What is it worth today? A. \$30,375 B. \$33,525 C. \$34,500 D. \$35, A lease calls for \$1,000 per month minimum plus 2 percent of annual sales in excess of \$100,000. What is the annual rent if the annual sales were \$150,000? A. \$12,000 B. \$13,000 C. \$14,000 D. \$15, There is a tract of land that is 1.25 acres. The lot is 150 feet deep. How much will the lot sell for at \$65 per front foot? A. \$9,750 B. \$8,125 C. \$23,595 D. \$8, A woman earns \$20,000 per year and can qualify for a monthly PITI payment equal to 25 percent of her monthly salary. If the annual tax and insurance is \$678.24, what is the loan amount she will qualify for if the monthly PI payment factor is \$10.29 per \$1,000 of loan amount? A. \$66,000 B. \$43,000 C. \$40,500 D. \$35, You pay \$65.53 monthly interest on a loan bearing 9.25 percent annual interest. What is the loan amount rounded to the nearest hundred dollars? A. \$1,400 B. \$2,800 C. \$6,300 D. \$8,

14 Chapter 17 Math Problems & Answers 20. What percentage of profit would you make if you paid \$10,500 for a lot, built a home on the lot that cost \$93,000, and then sold the lot and house together for \$134,550? A. 13 percent B. 23 percent C. 30 percent D. 45 percent 21. An income-producing property has \$62,500 annual gross income and monthly expenses of \$1,530. What is the appraised value if the appraiser uses a 10 percent capitalization rate? A. \$441,400 B. \$625,000 C. \$183,600 D. \$609, A man pays \$2,500 each for four parcels of land. He subdivides them into six parcels and sells each of the six parcels for \$1,950. What was his percentage of profit? A percent B. 17 percent C. 52 percent D. 78 percent 23. A property sells for \$96,000. If it has appreciated 4 percent per year straight line for the past five years, what did the owner pay for the property five years ago? A. \$76,800 B. \$80,000 C. \$92,300 D. \$115, If you purchase a lot that is 125 feet by 150 feet for \$6,468.75, what price did you pay per front foot? A. \$23.52 B. \$43.13 C. \$51.75 D. \$ Calculate the amount of commission earned by a broker on a property selling for \$61,000 if 6 percent is paid on the first \$50,000 and 3 percent is paid on the remaining balance. A. \$3,330 B. \$3,830 C. \$3,600 D. \$3,

15 Chapter 17 Math Problems & Answers CHAPTER 17 - MATH QUESTIONS ANSWER KEY 1. - D 2. - B 3. - A 4. - D 5. - D 6. - B 7. - A 8. - C 9. - B D B B B D D B C D D C A B B C A 457

16 Chapter 17 Math Problems & Answers Notes: 458

17 0" Chapter 17 Math Problems & Answers CHAPTER 17 - MATH PROBLEM SOLUTIONS 1. \$140,000 Original Cost 5% Depreciation per year x 7 years 35% Total Depreciation \$140,000 Original Cost x 65% = \$91,000 Today's Value 2. \$88,100 Original Cost = 12% Profit = 112% is the Sales Price \$98,672 Sales Price/112% = \$88,100 Original Cost 3. \$11,250 Net Operating Income divided by cap rate = Selling Price \$11,250/.09 = \$125,000 Selling Price 4. \$47,300 Net to Seller and \$1,150 Closing Costs \$47,300 + \$1,150 = \$48,450 Before Commission Commission = 5% therefore Dollars before Commission = 95% \$48,450/.95 = \$51,000 Selling Price 5. \$ Average Monthly Rent \$75,000 Gross Annual Sales \$50,000 Excluded from Percentage Calculation 2.5 % of Net Gross Annual Sales \$75,000 - \$50,000 = \$25,000 Gross Annual Sales used for Rent Calculation \$25,000 x 2.5% = \$625 Annual Percentage Rent \$625/12 = \$52.08 = Monthly Percentage Rent Base Rent = Monthly Percentage Rent = Average Monthly Rent \$ \$52.08 = \$ \$1,050 Monthly Rent x 12 = \$12,600 Annual Rent \$42,000 Annual Income Annual Rent/Annual Income = A Rent compared to Annual Income \$12,600/\$42,000 = 30% 7. \$73,000 Selling Price and 6% commission \$73,000 x 6% = \$4,380 Full Commission Managing Brokers shared commission \$4,380/2 = \$2,190 = Managing Broker Share Listing Agent = 30% of Managing Broker's Share \$2,190 x 30% = \$ Listing Agent's Commission 459

18 Chapter 17 - Math Problems & Answers 8. \$175,000 Purchase Price - 90% Loan to Value Ratio \$175,000 x.9 = \$157,500 loan \$157,000 Loan, 2.5 Discount Points and 1 Point Loan Origination Fee 3.5 points total for this loan 1 point = 1% of the Loan 3.5 points = \$157,000 x 3.5% = \$5, for Total Points 9. \$5,000 Loan and 9.5% Annual Interest \$5,000 x 9.5% = \$475 = Annual Interest Annual Interest divided by 12 = Monthly Interest \$475/12 = \$39.58 per month Eight months of interest = monthly interest x 12 \$38.58 x 8 = \$ (\$38.58 not rounded off, but extra decimal places included) Acre Plot, 1/8 for streets 100 Acres x 87.5% = 87.5 Acres for Lots 87.5 x 43,560 sq. ft. per Acre = 3,811, 500 sq. ft. for lots 140 lots 3,811,500/140 = 27,225 sq. ft. per lot 11. Net Operating Income = Purchase Price x Cap Rate \$115,000 x 12.5% = \$14,375 Net Operating Income (Annual) Monthly NOI = Annual NOI/12 \$14,375/12 = \$1, = Monthly Net Operating income 12. Selling Price = \$58,500 and Commission is 6%, with Licensee getting 40% \$58,500 x 6% = \$3,510 = Sponsoring Broker Commission \$3,510 x 40% = \$1,404 = Licensee's share of the Commission 13. \$10,000 loan, \$450 semi-annual interest payment \$450 x 2 = \$900 = Annual Interest Payment \$900/\$10,000 = 9% Annual Interest 14. Warehouse = 80 x 120 feet in area and 14 feet high Total Cubic Feet = 80 x 120 x 14 = 134,400 Cubic Feet Office Space is 1200 sf x 14 ft. = 16,800 cubic feet Net Warehouse Cubic Space is Total Warehouse Space less Office Cubic Space 134,400 cubic feet - 16,800 cubic feet = 117,600 net cubic feet for the warehouse 15. \$30,000 original cost, 3.5% appreciation for 5 years 3.5% x 5 = 17.5% Appreciation Original 100% plus 17.5% = 117.5% = Current Value \$30,000 x 117.5% = \$35,250 = Today's Value 460

19 Chapter 17 - Math Problems & Answers 16. \$1,000 per month base rent, \$150,000 Gross Annual Sales, \$100,000 excluded from percentage Percentage of Gross Annual Sales = 2% Gross Sales for Percentage Calculation = \$150,000 less \$100,000 = \$50,000 \$50,000 x 2% = \$1,000 Annual Percentage Rent \$1,000 per month base rent x 12 = \$12,000 Annual Base Rent Annual Base Rent and Percentage Rent = \$12,000 + \$1,000 = \$13, acres and a selling price of \$65 per front foot One side of the lot is 150 feet Area of lot = 1.25 x 43,560 = 54,450 sq. ft. Divide area by one side to obtain the length of the other side 54,450/150 = 363 feet 363 front feet x \$65 per front foot = \$23,595 selling price 18. Earns \$20,000 per year, 25% PITT per month Annual Income/12 = Monthly income \$20,000/12 = \$1, per month 25% of Gross Monthly Income = \$1,666.6 x 25% = \$ for Monthly PITI TI (Taxes & Insurance) = \$ per year \$678.24/12 = \$56.52 = Monthly TI \$ \$56.52 = \$ available for PI (Principle & Interest Payment) \$10.29 per \$1,000 is the factor \$360.15/\$10.29 x \$1,000 = \$35,000 Loan 19. \$65.53 per month interest and interest rate of 9.25% \$65.53 x 12 = \$ = Annual Interest Interest divided by rate = Loan \$786.36/.0925 = \$8,500 Loan 20. Paid \$10,500 for lot and \$93,000 for home Total Cost = \$10,500 + \$93,000 = 103,500 Selling Price = \$134,550 Net Profit = Selling Price less Cost \$134,500 - \$103,500 = \$31,050 Percent Profit = Profit divided by Cost \$31,050/\$103,500 =.3 = 30% Profit 21. \$1,530 monthly expenses, \$62,500 Annual Gross Income,10% cap rate \$1,530 x 12 = \$18,360 = Annual Expenses Annual Net Operating Income = Annual Gross Income Less Annual Expenses \$62,500 - \$18,360 = \$44,140 Net Operating Income Net Operating Income Divided by Cap Rate = Purchase Price \$44,140/.1 = \$441,400 = Purchase Price 461

20 Chapter 17 Math Problems & Answers 22. \$2,500 per parcel, 4 parcels = Cost \$1,950 per parcel, 6 parcels = Sales \$2,500 x 4 = \$10,000 \$1,950 x 6 = \$11,700 Sales less Cost = Profit \$11,700 - \$10,000 = \$1,700 Profit Dollars divided by Cost Dollars = % Profit \$1,700/\$10,000 = 17% Profit 23. Property worth \$96,000, 4% appreciation for 5 years 4% x 5 = 20% Current Value = 120% of original cost \$96,000 = 120% of Original Cost Current Value divided by 120% = Original Value \$96,000/1.2 = \$80, \$6, Price for lot on frontage foot basis, lot is 125 x 150 feet 125 is considered the front portion of the lot \$6,468.75/125 = \$51.75 = Price per front foot. 25. Selling Price of \$61,000, 6% on first \$50,000 and 3% on remaining \$50,000 x 6% = \$3,000 \$61,000 - \$50,000 = \$11,000 \$11,000 x 3% = \$330 \$3, = \$3,330 = Total Commission Notes: 462

### + Parts, Pieces, and Totals. + Economics of Real Estate. + Practice Makes Perfect

+ Parts, Pieces, and Totals + Economics of Real Estate + Practice Makes Perfect Contents Preface vii Introduction: How to Use This Book viii p T PARTS, PIECES, AND TOTALS 1 CHAPTER 1 Fractions, Decimals,

More information

### FORMULA FOR FINDING THE SQUARE FEET OF A RECTANGLE L x W = A

UNIT I REAL ESTATE MATH AREA MEASUREMENTS FORMULA FOR FINDING THE SQUARE FEET OF A RECTANGLE L x W = A Where: A = Area L = Length W = Width If the length = 30 and the width = 20 20 x 30 = 600 Sq. Feet

More information

### Calculator and QuickCalc USA

Investit Software Inc. www.investitsoftware.com. Calculator and QuickCalc USA TABLE OF CONTENTS Steps in Using the Calculator Time Value on Money Calculator Is used for compound interest calculations involving

More information

### NATIONAL INTERACTIVE STUDY GROUP UNIT 8 QUESTIONS

NATIONAL INTERACTIVE STUDY GROUP UNIT 8 QUESTIONS National Interactive Study Group 2 SESSION 8 JOHN MATHIS Notes for Tonight 1. To MUTE your phone line use *6 2. To UNMUTE your phone line use #6 3. Chat

More information

### INCOME APPROACH Gross Income Estimate - \$198,000 Vacancy and Rent Loss - \$9,900

INCOME APPROACH The Income Approach considers the return on Investment and is similar to the method that investors typically use to make their investment decisions. It is most directly applicable to income

More information

### Understanding the APOD How to Crunch the Numbers on Your Investment Transaction

Understanding the APOD How to Crunch the Numbers on Your Investment Transaction Commercial Investment Education Alliance Commercial Success Series 105 1 Commercial Investment Education Alliance Please

More information

### Broker Final Exam Review Math

Broker Final Exam Review Math Copyright Gold Coast Schools 1 Minimum Annual Production Page 73 A brokerage office had 200 sales last year. After paying sales commissions to the associates, there was \$229,000

More information

### Commercial Lending Glossary

Commercial Lending Glossary Acre: Unit of land measure equal to 43,560 square feet. Amortization (To Amortize): The act of paying off a debt through scheduled periodic payments. Example: A 20 year amortization

More information

### HOME BUYING101. 701.255.0042 www.capcu.org i

HOME BUYING101 701.255.0042 www.capcu.org i This book is intended as a general guide to the topics discussed, and it does not deliver accounting, personal finance, or legal advice. It is not intended,

More information

### CENTRAL TEXAS COLLEGE SYLLABUS FOR RELE 1325 REAL ESTATE MATH. Semester Hours Credit: 3 INSTRUCTOR: OFFICE HOURS:

SPRING 2000 CENTRAL TEXAS COLLEGE SYLLABUS FOR REAL ESTATE MATH Semester Hours Credit: 3 INSTRUCTOR: OFFICE HOURS: I. INTRODUCTION A. Includes mathematical logic, basic arithmetic skills, percentages,

More information

### www.commercialloansinalaska.com

Financial Corporation 5313 Arctic Blvd., Suite 206 Anchorage, Alaska 99518 (907)279-8551 www.commercialloansinalaska.com CHAPTER 1 INTRODUCTION TO COMMERCIAL LOANS Commercial Loans are defined as: "Any

More information

### 63-Hour Sales Associate Pre-License Course Course Outline and Time Line

63-Hour Sales Associate Pre-License Course Course Outline and Time Line The following detailed course outline is based on 63 one classroom hour sessions consisting of 50 minutes each. Time Detailed Course

More information

### Matt 109 Business Mathematics Notes. Spring 2013

1 To be used with: Title: Business Math (Without MyMathLab) Edition: 8 th Author: Cleaves and Hobbs Publisher: Pearson/Prentice Hall Copyright: 2009 ISBN #: 978-0-13-513687-4 Matt 109 Business Mathematics

More information

### What does it mean? A Glossary of terms. Home Ownership Fact Sheet. Housing Programs Department of Housing and Public Works

Home Ownership Fact Sheet What does it mean? A Glossary of terms There are many words that are specific to property buyers, sellers and lenders. This list is designed to explain some of these words which

More information

### What s s New With FHA?

What s s New With FHA? Presented By: Bill Ladewig 866.204.9733 http://www.mortgage- FHA Calculator Calculates everything needed to quote or qualify FHA loans Click to Open: http://www.themtgmentor.com/fha_mortgage_calculator.html

More information

### Underwriting Commercial Loans

Underwriting Commercial Loans T he objective of this study is to understand the basic principles of underwriting for multifamily housing and commercial real estate loans. As a mortgage broker, real estate

More information

### Before you develop or acquire a property, you must know how big it is size is the key metric for real estate.

Real Estate Development Key Terms If you want to understand real estate development, you need to know the key terms used to describe properties whether you re developing the properties from the ground

More information

### Income Capitalization Analysis Re: Example Property By: Your Name of Your Company Name

Income Capitalization Analysis Re: Example Property By: Your Name of Your Company Name To obtain a reliable indication of a property's Market Value from the Income Capitalization Approach, it is necessary

More information

### Mortgage Terms Glossary

Mortgage Terms Glossary Adjustable-Rate Mortgage (ARM) A mortgage where the interest rate is not fixed, but changes during the life of the loan in line with movements in an index rate. You may also see

More information

### MORTGAGE QUALIFIER PLUS

MORTGAGE QUALIFIER PLUS Residential Mortgage Finance Calculator Model 3416 USER S GUIDE Introducing the MORTGAGE QUALIFIER PLUS Mortgage Loan Calculator The MORTGAGE QUALIFIER PLUS was custom-designed

More information

### Home Mortgage Interest Deduction

Department of the Treasury Internal Revenue Service Publication 936 Cat.. 10426G Home Mortgage Interest Deduction For use in preparing 1998 Returns Contents Introduction... 1 Part I: Home Mortgage Interest...

More information

### Chapter 38. Appraising Income Property INTRODUCTION

Chapter 38 Appraising Income Property INTRODUCTION The income appraisal approach estimates the current market value for a real property by projecting and analyzing the income that the property could generate.

More information

### Discretionary Capital Expenditures. Discretionary Capital Expenditure. Presented by Byron Smith, CCIM

Discretionary Capital Expenditures Discretionary Capital Expenditure Presented by Byron Smith, CCIM Discretionary Capital Expenditure Case Study Overview During the holding period of a commercial real

More information

### The Process of Taxation

The Process of Taxation The property taxes you pay fund services provided by the combination of taxing entities within the tax district you reside. Property taxes are also known as real estate taxes and

More information

### Appraisal A written analysis prepared by a qualified appraiser and estimating the value of a property

REAL ESTATE BASICS Affordability Analysis An analysis of a buyer s ability to afford the purchase of a home, reviews income, liabilities, and available funds, and considers the type of mortgage a buyer

More information

### Introduction to Real Estate Investment Appraisal

Introduction to Real Estate Investment Appraisal Maths of Finance Present and Future Values Pat McAllister INVESTMENT APPRAISAL: INTEREST Interest is a reward or rent paid to a lender or investor who has

More information

### Homebuyers Dictionary

2935 Breezewood Avenue Suite 100 Fayetteville, NC 28303 www.fayhba.org Homebuyers Dictionary ARM? GPM? PITI? You d have to be a cryptologist to figure out some of the terms buyers encounter during the

More information

### Section 8.1. I. Percent per hundred

1 Section 8.1 I. Percent per hundred a. Fractions to Percents: 1. Write the fraction as an improper fraction 2. Divide the numerator by the denominator 3. Multiply by 100 (Move the decimal two times Right)

More information

### How do you compare numbers? On a number line, larger numbers are to the right and smaller numbers are to the left.

The verbal answers to all of the following questions should be memorized before completion of pre-algebra. Answers that are not memorized will hinder your ability to succeed in algebra 1. Number Basics

More information

### HOME BUYING101 TM %*'9 [[[ EPXEREJGY SVK i

HOME BUYING101 TM i This book is intended as a general guide to the topics discussed, and it does not deliver accounting, personal finance, or legal advice. It is not intended, and should not be used,

More information

### How To Understand The Laws Of Korea

A Additional Payment The method of significantly reducing your home loan with extra payments to your mortgage. Even paying fortnightly rather than monthly can have a big impact. Amortisation Another way

More information

### MORTGAGE DICTIONARY. Amortization - Amortization is a decrease in the value of assets with time, which is normally the useful life of tangible assets.

MORTGAGE DICTIONARY Adjustable-Rate Mortgage An adjustable-rate mortgage (ARM) is a product with a floating or variable rate that adjusts based on some index. Amortization - Amortization is a decrease

More information

### General Questions and Answers on the Mortgage Recording Taxes

New York State Department of Taxation and Finance Taxpayer Services Division Technical Services Bureau General Questions and Answers on the This publication addresses some general questions regarding the

More information

### REVIEW MATERIALS FOR REAL ESTATE ANALYSIS

REVIEW MATERIALS FOR REAL ESTATE ANALYSIS 1997, Roy T. Black REAE 5311, Fall 2005 University of Texas at Arlington J. Andrew Hansz, Ph.D., CFA CONTENTS ITEM ANNUAL COMPOUND INTEREST TABLES AT 10% MATERIALS

More information

### Estimated Purchaser Cost Form

Buyer s Cost 1 Estimated Purchaser Cost Form When to use the form: 1. before showing property; 2. at the time of an offer and/or counteroffer; and, 3. prior to the closing. 2 Estimated Purchaser Cost Form

More information

### Perimeter, Area, and Volume

Perimeter, Area, and Volume Perimeter of Common Geometric Figures The perimeter of a geometric figure is defined as the distance around the outside of the figure. Perimeter is calculated by adding all

More information

### GLOSSARY COMMONLY USED REAL ESTATE TERMS

GLOSSARY COMMONLY USED REAL ESTATE TERMS Adjustable-Rate Mortgage (ARM): a mortgage loan with an interest rate that is subject to change and is not fixed at the same level for the life of the loan. These

More information

### Test 3 Spring 2015: Chapters 8 (Land Contract) through 14 and 26 Jacobus

Finance 382 Real Estate Principles and Practice Instructor: Jan E. Beran Student s Name Version A FILL IN YOUR NAME (Lastname, Firstname) WHERE INDICATED, BE SURE TO FILL IN THE CORRESPONDING BUBBLES.

More information

### Cash Flow Analysis Multi-Family Building For Sale Boston, Massachusetts 02215

Property Report Cash Flow Analysis Presented by: Pantheon Property Group 665 Beacon Street, Suite #305 Boston, Massachusetts 02131 Office: Mobile: (830) 660-5265 Data Analysis Provided by Pantheon Property

More information

### MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another.

MORTGAGE TERMS Acceleration Clause This is a clause used in a mortgage that can be enforced to make the entire amount of the loan and any interest due immediately. This is usually stipulated if you default

More information

### 6 Units - Clearwater

6 Units - Clearwater For more information contact: Brad Carter, CCIM 727-481-6842 bdcarter@tampabay.rr.com Phone: 727-481-6842 9225 Ulmerton Rd. Suite P Largo, FL 33771 www.tip-properties.com Real Estate

More information

### BUSI 121 Foundations of Real Estate Mathematics

Real Estate Division BUSI 121 Foundations of Real Estate Mathematics SESSION 2 By Graham McIntosh Sauder School of Business University of British Columbia Outline Introduction Cash Flow Problems Cash Flow

More information

### SHOPPING FOR A MORTGAGE

SHOPPING FOR A MORTGAGE The Traditional Fixed-Rate Mortgage Key characteristics: Level payments, fixed interest rate, fixed term. This mortgage is the one which most of us know, and it is still the loan

More information

### Broker. Financing Real Estate. Chapter 12. Copyright Gold Coast Schools 1

Broker Chapter 12 Financing Real Estate Copyright Gold Coast Schools 1 Learning Objectives Describe the difference between a note and a mortgage Explain the benefits of having the first recorded lien on

More information

### LHFS Wholesale. HECM for Purchase Training Home Equity Conversion Mortgage. Great Rates. Great Programs. Great Service.

LHFS Wholesale HECM for Purchase Training Home Equity Conversion Mortgage Great Rates. Great Programs. Great Service. Discover the HECM for Purchase Loan The HECM for Purchase Program is a Federal Housing

More information

### Non-Recourse Financing for a Self-Directed IRA Investment

Non-Recourse Financing for a Self-Directed IRA Investment Transaction Summary Date: September 2012 Property Description: 12,720 SF retail building built in 2001 in good condition. The property is 100%

More information

### EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT 1031 EXCHANGE (BUT DIDN T KNOW YOU SHOULD ASK )

EVERYTHING YOU ALWAYS WANTED TO KNOW ABOUT 1031 EXCHANGE (BUT DIDN T KNOW YOU SHOULD ASK ) Nancy N Grekin McCorriston Miller Mukai MacKinnon 5 Waterfront Plaza, 4 th Floor Honolulu, Hawaii 96813 529-7419

More information

### House Rich and Cash Poor: Ways to Unlock Your Home s Value

House Rich and Cash Poor: Ways to Unlock Your Home s Value Avenidas Housing Conference, March 10, 2012 Barbara Krimsky Binder, CFP, BKB Financial Advisors Does This Describe Your Situation? - You bought

More information

### Real Estate. Refinancing

Introduction This Solutions Handbook has been designed to supplement the HP-2C Owner's Handbook by providing a variety of applications in the financial area. Programs and/or step-by-step keystroke procedures

More information

### Home Buyers. from application to closing. Derek Haley, Senior Loan Officer SunTrust Mortgage, Inc. 919.426.5023 Derek.Haley@SunTrust.

Information for First-time Home Buyers An overview of the mortgage process, from application to closing. Derek Haley, Senior Loan Officer SunTrust Mortgage, Inc. 919.426.5023 Derek.Haley@SunTrust.com NMLSR#

More information

### For the non real estate professional

For the non real estate professional An introductory case study of the building of a Transit Oriented Development Views from For Profit vs. Non-Profit Developers For Profit Developer Non-Profit Developer

More information

### Real estate terms and definitions

Real estate terms and definitions Annual Percentage Rate (APR): The total yearly cost of a mortgage as expressed by the actual rate of interest paid. The APR includes the base interest rate, points and

More information

### Accounts payable Money which you owe to an individual or business for goods or services that have been received but not yet paid for.

A Account A record of a business transaction. A contract arrangement, written or unwritten, to purchase and take delivery with payment to be made later as arranged. Accounts payable Money which you owe

More information

### How to Buy and Sell Property FAST in Today s Market!

How to Buy and Sell Property FAST in Today s Market! A land contract is a written agreement between a person who has sold property ("the Seller or Vendor") and the person who bought that property ("the

More information

### Owning a Co-op 10 questions to ask before you buy

Owning a Co-op 10 questions to ask before you buy So you want to own a Co-Op! If you re a first-time homebuyer, this is probably one of the biggest financial decisions you have ever made. As rents escalate

More information

### State Tax Commission. Basic Income. MAAO Prerequisite Course. Published July 2014

State Tax Commission Basic Income MAAO Prerequisite Course Published July 2014 All rights reserved. This material may not be published, broadcast, rewritten or redistributed in whole or part without the

More information

### Lease-Versus-Buy. By Steven R. Price, CCIM

Lease-Versus-Buy Cost Analysis By Steven R. Price, CCIM Steven R. Price, CCIM, Benson Price Commercial, Colorado Springs, Colorado, has a national tenant representation and consulting practice. He was

More information

### Chapter 15 Questions Real Estate Financing: Practice

Chapter 15 Questions Real Estate Financing: Practice 1. Kahlid has been making periodic payments of principal and interest on a loan, but the final payment will be larger than the others. This is a(n)

More information

### Simple Interest. and Simple Discount

CHAPTER 1 Simple Interest and Simple Discount Learning Objectives Money is invested or borrowed in thousands of transactions every day. When an investment is cashed in or when borrowed money is repaid,

More information

### Introduction to the Hewlett-Packard (HP) 10BII Calculator and Review of Mortgage Finance Calculations

Introduction to the Hewlett-Packard (HP) 10BII Calculator and Review of Mortgage Finance Calculations Real Estate Division Sauder School of Business University of British Columbia Introduction to the Hewlett-Packard

More information

### Section 7.2 Area. The Area of Rectangles and Triangles

Section 7. Area The Area of Rectangles and Triangles We encounter two dimensional objects all the time. We see objects that take on the shapes similar to squares, rectangle, trapezoids, triangles, and

More information

### Adjustable Rate Mortgage (ARM) a mortgage with a variable interest rate, which adjusts monthly, biannually or annually.

Glossary Adjustable Rate Mortgage (ARM) a mortgage with a variable interest rate, which adjusts monthly, biannually or annually. Amortization the way a loan is paid off over time in installments, detailing

More information

### Module 1: Corporate Finance and the Role of Venture Capital Financing TABLE OF CONTENTS

1.0 ALTERNATIVE SOURCES OF FINANCE Module 1: Corporate Finance and the Role of Venture Capital Financing Alternative Sources of Finance TABLE OF CONTENTS 1.1 Short-Term Debt (Short-Term Loans, Line of

More information

### California Real Estate Principles, 11 th ed., by Walt Huber Midterm B Chapter 8-15 Copyright March 2006, Educational Textbook Company

California Real Estate Principles, 11 th ed., by Walt Huber Midterm B Chapter 8-15 Copyright March 2006, Educational Textbook Company 1. If Miss Dooling borrowed \$8,000 from the Los Angeles Downtown Bank

More information

### Fifth Third Home Buying Guide. A Guide to Residential Home Buying.

Fifth Third Home Buying Guide A Guide to Residential Home Buying. Important Contacts and Numbers. Use this page to record important information as you move through the homebuying process. Realtor/Builder

More information

### Appendix C: HUD-1 Settlement Statement

Appendix C: HUD-1 Settlement Statement HUD-1 Settlement Statement The Settlement Statement, or HUD-1 Form, details the exact breakdown of all the money paid or received by both the buyer and the seller.

More information

### How To Get A Home Equity Line Of Credit

A GUIDE TO HOME EQUITY LINES OF CREDIT Call or visit one of our offices today to see what products in this guide we have to offer you! TABLE OF CONTENTS Introduction What is a home equity line of credit

More information

### Outstanding mortgage balance

Using Home Equity There are numerous benefits to owning your own home. Not only does it provide a place to live, where you can decorate as you want, but it also provides a source of wealth. Over time,

More information

### Characteristics of the Four Main Geometrical Figures

Math 40 9.7 & 9.8: The Big Four Square, Rectangle, Triangle, Circle Pre Algebra We will be focusing our attention on the formulas for the area and perimeter of a square, rectangle, triangle, and a circle.

More information

### Step 1: Determine the Size, Parameters and Construction Timeline for the Property

The Real Estate Development Process While real estate development models may look complex, the actual concepts are simpler than what you see for normal companies. Real estate development modeling is different

More information

### Lecture Notes. Dollars and Sense of Building Rehabilitation. Attracting Equity and Debt. National Development Council

1 Dollars and Sense of Building Rehabilitation Attracting Equity and Debt 2 Lecture Notes 927 Dudley Road Edgewood, KY 41017 ph: 859-578-4850 fax: 859-578-4860 2006 All rights reserved. Version: August

More information

### MSHDA's Down Payment Assistance and Mortgage Credit Certificate. May 21, 2010 (3:30 5:00 p.m.) Facilitated by: Carol Brito (MSHDA) Sponsored by:

MSHDA's Down Payment Assistance and Mortgage Credit Certificate May 21, 2010 (3:30 5:00 p.m.) Facilitated by: Carol Brito (MSHDA) Sponsored by: CREDIT UNIONS A DRIVING FORCE OF COMMUNITIES MSHDA Overview

More information

### HOMEOWNERSHIP: Understanding What You Can Afford, Mortgages, and Closing Costs. Illinois Association of REALTORS. Springfield, IL 62701

Illinois Association of REALTORS 522 S. Fifth Street Springfield, IL 62701 www.illinoisrealtor.org www.yourillinoishome.com HOMEOWNERSHIP: Understanding What You Can Afford, Mortgages, and Closing Costs

More information

### DISCLAIMER: Copyright: 2013

DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate

More information

### DIMENSIONAL ANALYSIS #2

DIMENSIONAL ANALYSIS #2 Area is measured in square units, such as square feet or square centimeters. These units can be abbreviated as ft 2 (square feet) and cm 2 (square centimeters). For example, we

More information

### Commercial Mortgage Types and Decisions

Commercial Loans vs Home Loans Fin 5413 Commercial Mortgage Types and Decisions Commercial mortgages and notes are not as standardized as home loans Although this is changing with growth in commercial

More information

### Chapter 12. Introduction to Value Determination

Chapter 12 Value Theory, Highest and Best Use Analysis, and the Cost Approach 11/17/2005 FIN4777 - Special Topics in Real Estate - Professor Rui Yao 1 Introduction to Value Determination Price is usually

More information

### Reverse Mortgage. by Jeffrey D. Smith

There are finance companies that are offering the "Reverse Mortgage" to seniors (at least age 62). Seniors with a substantial amount of equity in their residence are targets of this aggressive predatory

More information

### DISCLAIMER: Copyright: 2013

DISCLAIMER: This publication is intended for EDUCATIONAL purposes only. The information contained herein is subject to change with no notice, and while a great deal of care has been taken to provide accurate

More information

### VOLUME of Rectangular Prisms Volume is the measure of occupied by a solid region.

Math 6 NOTES 7.5 Name VOLUME of Rectangular Prisms Volume is the measure of occupied by a solid region. **The formula for the volume of a rectangular prism is:** l = length w = width h = height Study Tip:

More information

### Real Property Contracts Key Clauses

Real Property Contracts Key Clauses Parties, including the names of Buyer and seller (including marital status if two of them are married) Name of the agent or broker Corporate information if either side

More information

### Property Report for. 3437 Peachtree Corners Circle. Norcross, GA 30092

Property Report for 3437 Peachtree Corners Circle Norcross, GA 30092 Prepared by: The Carribean Group Real Estate Partnerships for the 21 st Century! Lorraine Carribean Ramus Carribean Broker REALTOR Direct:

More information

### Mortgage Glossary. Mortgage loans under which the interest rate is periodically adjusted based upon terms agreed to at the inception of the loan.

Adjustable Rate Mortgage (ARM): Alternative Documentation: Amortization: Annual Percentage Rate (APR): Appraisal: Appraisal Amount or Appraised Value: Appreciation: Balloon Mortgage: Bankruptcy: Cap: Cash-out

More information

### PART C *14.4 Mortgage Loans: Additional Topics

PART C *14.4 Mortgage Loans: Additional Topics A mortgage loan sometimes involves costs in addition to interest charges. In this section you will learn how to incorporate these additional costs into an

More information

### Principles of California Real Estate

Principles of California Real Estate Chapter 1: The Nature of Real Property What Is Real Property Appurtenance Air Rights Water Rights Solid Mineral Rights Oil and Gas Rights Other Appurtenant Rights Attachments

More information

### Mortgage Terms. Accrued interest Interest that is earned but not paid, adding to the amount owed.

Mortgage Terms Accrued interest Interest that is earned but not paid, adding to the amount owed. Negative amortization A rise in the loan balance when the mortgage payment is less than the interest due.

More information

### Your Guide To Home Financing

Your Guide To Home Financing You re buying your first home. We have an easy mortgage solution. When buying a home, the world of mortgages can be intimidating and overwhelming. The key to feeling good about

More information

### Reg. 1.5833-1 (Effective for tax years beginning on and after January 1, 1998) Allocation and apportionment of Vermont net income by corporations

Reg. 1.5833 ALLOCATION AND APPORTIONMENT OF INCOME Reg. 1.5833-1 (Effective for tax years beginning on and after January 1, 1998) Allocation and apportionment of Vermont net income by corporations (a)

More information

### Settlement. Coming to Grips With. What to Know before Your Closing. The Event. What Is Closing?

Coming to Grips With Settlement What to Know before Your Closing The closing, or settlement, is the last step in getting your mortgage and actually becoming the owner of your new home. You ll probably

More information

### Understanding Financial Statements. For Your Business

Understanding Financial Statements For Your Business Disclaimer The information provided is for informational purposes only, does not constitute legal advice or create an attorney-client relationship,

More information

### COMMERCIAL LOAN OVERVIEW

COMMERCIAL LOAN OVERVIEW A BORROWER S GUIDE COMMERCIAL LOAN OVERVIEW GUIDE Commercial Mortgage Underwriting Guidelines and Process Commercial financing for commercial properties is underwritten on a case

More information

### Chapter 13: Residential and Commercial Property Financing

Chapter 13 Outline / Page 1 Chapter 13: Residential and Commercial Property Financing Understanding the Mortgage Concept - secured vs. unsecured debt - mortgage pledge of property to secure a debt (See

More information

### AN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS

AN INTRODUCTION TO REAL ESTATE INVESTMENT ANALYSIS: A TOOL KIT REFERENCE FOR PRIVATE INVESTORS Phil Thompson Business Lawyer, Corporate Counsel www.thompsonlaw.ca Rules of thumb and financial analysis

More information

### 14.4 Mortgage Loans: Additional Topics

14.4 Mortgage Loans: Additional Topics A mortgage loan sometimes involves costs in addition to interest charges. In this section, you will learn how to incorporate these additional costs into an overall

More information

### Appraiser: a qualified individual who uses his or her experience and knowledge to prepare the appraisal estimate.

Mortgage Glossary 203(b): FHA program which provides mortgage insurance to protect lenders from default; used to finance the purchase of new or existing one- to four family housing; characterized by low

More information

### MATH 110 Landscape Horticulture Worksheet #4

MATH 110 Landscape Horticulture Worksheet #4 Ratios The math name for a fraction is ratio. It is just a comparison of one quantity with another quantity that is similar. As a Landscape Horticulturist,

More information

### To understand and apply the concept of present value analysis in management decision making within the framework of the regulatory process.

Present Value Analysis Effective management decision making means making the best possible choices from the available investment alternatives consistent with the amount of funds available for reinvestment.

More information

### Sample Property 930 LaVergne Ln La Vergne, TN 37086

Property Report Sample Property Presented by: My Company 123 Main St Anywhere, CA 12345 Office: Mobile: Fax: You can customize the footer too! 1 Overview Sample Property Purchase Info Square Feet (2 Units)

More information

### Paragon 5. Financial Calculators User Guide

Paragon 5 Financial Calculators User Guide Table of Contents Financial Calculators... 3 Use of Calculators... 3 Mortgage Calculators... 4 15 Yr vs. 30 Year... 4 Adjustable Rate Amortizer... 4 Affordability...

More information

### Fully Amortized Loan: Fixed Rate This loan is the easiest payment to calculate since the payment stays the same throughout the term of the loan.

SECTION THREE: TYPES AND EXAMPLES OF LOANS This Section on types of loans, provides the opportunity to begin calculating actual loan payments. A basic understanding of the use of a financial calculator

More information
{"found_math": false, "script_math_tex": 0, "script_math_asciimath": 0, "math_annotations": 0, "math_alttext": 0, "mathml": 0, "mathjax_tag": 0, "mathjax_inline_tex": 0, "mathjax_display_tex": 0, "mathjax_asciimath": 0, "img_math": 0, "codecogs_latex": 0, "wp_latex": 0, "mimetex.cgi": 0, "/images/math/codecogs": 0, "mathtex.cgi": 0, "katex": 0, "math-container": 0, "wp-katex-eq": 0, "align": 0, "equation": 0, "x-ck12": 0, "texerror": 0}