.png){kind=logo}
Real Estate Math Formulas Flashcards Area of a triangleFormula: (Base x Height) / 2Example:6' B x 10' H = 60 SF /
2 = 30 SF
Beginning Depreciable basis Formula(Initial property value + Any capital improvements - land
value)Example:Property value = $500,000; land value =
$110,000; depreciation term = 39 yearsStep 1: ($500,000 -
110,000) = $390,000 depreciable basisStep 2: ($390,000 ÷
39 years) = $10,000 annual depreciation PracticeA developer wants to develop a 20-acre subdivision. He figures that the streets and common area will take up about 25% of this overall area. If the minimum lot size is to be 10,000 SF, how many lots can the developer have on this
property?Solve:20 acres ÷ 4 = 5 acres, 20 acres - 5 acres
= 15 acres, 15 acres x 43,560 SF= 653,400 SF, 653,400 SF ÷ 10,000 SF= 65 lots Income Capitalization ApproachThe Income Capitalization Formula determines the rate of return considered to be a reasonable return on investment - given the risk.Net Operating Income (NOI)The income projected for an income-producing property after deducting losses for vacancy and collection and operating expenses.Volume =REMEMBER CUBIC FEETHeight (or Depth) x Width x
LengthExample:If a homeowner wishes to fill in an old,
outdated swimming pool that measures 20' in length, 10' in width and is 6' in depth with dirt, how much dirt will he need
to buy in cubic feet?Steps:H (or D) x W X L6' x 10' x 20' =
1,200 Cu/Ft PointsPoints are fees charged by lenders to either lower an interest or to originate the loan. Each point charged is 1
percent of the loan amount. Also a discount pointEx: A
lender is charging 1% loan origination fee and 2 discount points to the borrower. The loan amount is $150,000. What overall percentage is the lender charging? What is the percentage in points?Formula:Loan origination fee: 1%Discount points: 2%Total: 3%Loan amount: $150,000Total Charged - $150,000 x .03 total = $4,500.00
totalPoints: $150,000 x .02 points = $3,000.00 total points
chargedA borrower pays $500 for a $10,000 loan. How many points are paid?$500 ÷ 10,000 = .05 = 5 pointsA borrower pays 5 points on a $10,000 loan. What is the fee paid?$10,000 x .05 = $500A borrower pays $500 as 5 points on a loan. What is the loan amount?$500 ÷ .05 =
$10,000
- acre43,560 SqFtTotal Square Footage / 43,560 = Number of
Acres43,560 x Number of Acres = Total Square Footage Gross Rent MultiplierThe Gross Rent Multiplier is an appraisal method for single family or duplexes based on the gross monthly rent.Adjusting Comparables (Comparative Marketing Analysis)Rules:Never adjust the subject!If the comparable is superior to the subject, SUBTRACT value from the comparable.If the comparable is inferior to the subject, ADD VALUE to the comparable.ExamplesThe subject has a $10,000 pool and no porch. A comparable that sold for $250,000 has a porch ($5,000), an extra bathroom
($6,000), and no pool.Adjustments to comp: $250,000
(+10,000 - 5,000 - 6,000) = $249,000 indicated value of subjectorA comparable has 3 bedrooms and the subject has 4.The appraiser estimates the value contribution of a
bedroom to be $10,000.Adjust the comparable by entering +$10,000 in the CMA.Area of a Rectangle or Square =Width x Depth/Length (Horizontal)orWidth x Height (Vertical) Front FootageThe measurement of a parcel of land by the number of feet
of street or road frontage.Formula: Cost of a lot / Width =
Price per footExample: If the EZ Sales car lot is valued at
$150,000 and is 300' wide, how much is it worth per front
foot?Steps:$150,000 ÷ 300 = $500 per front foot
Gross Rent Multiplier FormulasSales Price = Monthly Rental Income x GRMMonthly Rental Income = Sales Price / GRMGRM = Sales Price /
Monthly Rental IncomeExamplesWhat is the value of a house with monthly rent of $1,200 and a GRM of 112?$1,200 rent x 112 GRM = $134,400orWhat is the GRM of a house with monthly rent of $1,200 and a value of $134,400?$134,400 price ÷ $1,200 rent = 112 GRMorWhat is the value of a commercial property with an annual income of $33,600 and a GIM of 9.3?$33,600 income x 9.3
.png)