Real Estate Formulas and Acronyms Flashcards

Real Estate Formulas and Acronyms Flashcards POITAcronym for tax deductions - Points, Origination, Interest, Taxes Appreciation/Depreciation calc (IE A building that is 10 years old has a value of 30000. What is the value new if annual appreciation rate is 2.75%?)

First find rate:2.75 x 10 years = 27.50100% - 27.50% =

72.5% (The building was 100 when new so if it appreciated you would do 100% + 27.5)Amt Received = base x rate or(30000 = base * .725)30000/.725 = base41,379 = base straight-line method of depreciationProperty's cost/number of years of it's expected economic life Principle of substitutionstates when several items with essentially the same amenities and utilities are available, the new item with the lowest price will attract the most demand.PEGSThe factors that influence the real estate market can be broadly divided into Physical, Economical, Governmental, and Social factors (P-E-G-S).IRMATotal Circumstances Test - is it real or personal?Intent of person attaching item (is it supposed to be temp?); Relationship of attaching person (owner or tenant?); Method of attachment (removal causes damage?); Adaptability (has property or item been altered to work together) ***Investor YieldOne discount received increases the yield on a loan by one-eighth percent,2 = increase by 1/4%4 = increase by 1/2%6 = increase by 3/4%8 = increase by 1%Or the lender yield per point is 1.25% (.125) How many sections are in a township?36 Number of acres in a section640

GIVENIncome approach formula: Gross Income - Vacancy -

Expense = Net Operating Income if a building has suffered 25% depreciation and it has an economic life of 25 years - what is it's effective age? What is it's remaining economic life?25 x .25 = 6.25 effective age, 25-6.25 = 18.75 remaining economic life formula for tax rate= annual taxes / assessed value If there is a special assessment for a new road for $50 a foot and the frontage is 100ft and the city is paying 50% what is the formula ($50 x 100/2) / 2 - you only have to pay for 1/2 the road.The house across the street pays for the other half due on sale clauseA clause, included in many mortgages, permitting the lender to require the borrower to repay the outstanding balance when the property is sold. Prevents loan assumption.Square foot of a triangle1/2 (base x height)

Volume or cubic feetlength x width x height Number of cubic feet in a cubic yard27 formula for assessed value= annual taxes / tax rate Section 1 is always where in a township? Northeast or upper left-hand quarter Number of linear feet in a mile5280 Fresh CornAcronym for Discrimination of the following Protected

Classes under the Fair Housing Act: Familial Status, Race,

(equal), Sex, Handicap, Color, (opportunity), Religion, National Origin cost approach calculationCost to build new - depreciation + Land Value How many square miles in a section?1, A section of land is one mile by one mile and consist of 640 acres of land, OLD CARThe agency relationship is a contract that gives the REALTOR® a fiduciary duty for 6 specific standards. We

remember the standards by using the acronym OLD CAR:

(Obedience, Loyalty, Disclosure, Confidentiality, Accountability and Reasonable Care/Diligence).Formula for square foot of a circleTo determine the square footage of the area of a circle, multiply 3.1416 times the radius (in feet) squared.Simple Interest FormulaI = prt (Interest = Principal X Rate X Time) Number of square feet in an acre43,560 Alienation ClauseA provision in a mortgage requiring full payment of the debt upon the transfer of title to the property, due on sale.Prevents loan assumptions.How many principal meridians are there in the US 37 formula for annual taxes= tax rate X assessed value.How many square feet in a square yard?9 DUSTEssential Elements of Value - Demand, Utility, Scarcity, Transferability Principle of conformityAppraisal theory that affirms that the maximum value is realized if the use of land conforms to existing neighborhood standards. (Building a home that is significantly larger than surrounding houses violates this) Square footage of a square/rectanglelength x Width LL BEANSYou need a license if you LL Beans real property for

compensation for others: Lists, Leases, Buys, Exchanges,

Auctions, Negotiates, Sells Defeasance ClauseA clause used in leases and mortgages that cancels a specified right upon the occurrence of a certain condition, such as cancellation of a mortgage upon repayment of the mortgage loan.Net Operating Income FormulaPotential Gross Income (PGI) - Collections & Vacancy rate = Effective Gross Income (EGI) - operating expenses = NOI** Note Operating Expenses do not include expenses incurred by the owner. (Debt, Capital Improvements,

depreciation for income tax) What does the mnemonic OCEAN stand forOpenContinuousExclusiveAdverseNotorious(relates to Requirements for Adverse Possession)