Transcript Pre-License Math Review

Pre-License Math Review
13 questions on state test
13% of general knowledge questions
Calculating physical dimensions
Lot & Structure
• Lot size 450’ X 484’
• = 217,800 sq. ft.
• Structure size
• 60 feet X 40 feet
• = 2,400 square feet
Lot 1 , Block 1, Brown Acres
484 feet
Spot’s House
40 feet
60 feet
450 feet – Front Foot
Easy street
What is property’s market value?
Calculating size
Lot is 450’ x 484’ = 217,800 square feet
First # is front foot (street)
Land in this area sells for about $30,000 per acre
What is the market value of this lot?
217,800 / 43,560 = 5 acres x $30,000 = $150,000
What is value of house?
Spot’s house is 60’ x 40’ = 2400 square feet
Only heated and cooled area above ground is
included in living area
Comparable homes sell for about $120 per
square foot plus land cost
2400 square feet X $120 per sq. ft. = $288,000
House & Land
What is the market value for this house and land?
2400 x $120 = $288,000 + $150,000 land = $438,000
Market Value, Price, and Cost are not necessarily related
• Except in new construction
– Principle of substitution
– Principle of conformity
• $438,000 Market Value
• How much is a 10% commission?
• How much is a 5% commission?
– Divide the 10% fee in half to $21,900
• Listing broker splits 50/50 with selling broker
• Listing agent gets 60/40 split with company
• How much was check to agent?
• 438,000 X .05 =
• $21,900 total commission
• 50% to selling broker = $10,950
• Listing broker then splits
• 60% to listing agent $10,950 X .6 = $6,570
• 40% to listing brokerage = $4,380
• LTV = Loan to Value
• New buyer got an 80% LTV mortgage
• How much was loan?
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•
•
•
VA 100%
Rural 100%
FHA 96.5%
Conventional 80%
• $438,000 X .8 = $350,400 conventional loan
• Buyer paid origination fee of 1 point
– A point is 1 % of loan, not purchase price
– How much for fee?
• $3,504
• Buyer paid 3 discount points
– Increases lender’s yield by 3/8 %
– How much for points?
• $10,512
• Loan points are based on loan amount
• May be added into loan
• Interest rate is 6% on $350,400
• How much is payment (amortized loan) of 30 years
• Rate chart 30 years @ 6% = Factor of 6
• 350.4 X 6 = $2,102 payment of Principle & Interest
– Taxes and Insurance will be on top of P&I
• It’s a PITI the payment is so much
• $2,102 monthly payment
• $350,400 loan X 6% (.06) / 12 = interest first month =
• $21,040 annual interest / 12 months =
• $1,752 first month interest
• $2,102 payment - $1,752 interest = $350 principle
– Entire first year’s principle will only be about $4,200
– First year’s interest will be about $21,000
• Second month loan balance
• $350,400 - $350 = $350,050
• Second month interest
• $350,050 X .06 = 21,003 / 12 = $1,750
• Proration
• Closing on 21th of month
• Use banker’s year of 360 days, 12 months, 30 day month
– Unless told to use calendar year
• Prepay interest for 10 days, includes day of closing
• $350,400 X .06 = $21,024 / 360 =
• $58.40 per day X 10 days = $584.00
– Pays interest for balance of month of closing
• First payment will be due the 1st day of second month
– Will include interest for first month after closing
• Decimal to percentage
• 0.25 = 25%, Quarter of
• 0.90 = 0.9 = 90%
• Percentage to decimal
• 33% = 0.33
• 10% commission
– Multiply sales price by 0.10
• Annual – Monthly
– Interest rate will be stated in annual terms
– Watch for rent or interest to be stated in months
• Semi – annual = twice per year
•
•
•
•
•
________Results________
$10,000
:
:
: Commission: Paid
Base
Rate
$100,000 Sales Price X
.10 (or 10%) Commission Rate
X
Rate is expressed as a decimal
•
Multiply bottom #s or divide top # by bottom #
•
•
•
Results / Base = Rate
Results / Rate = Base
Results = Base X Rate
“T” Formula
Base X Rate or Results / Base or Results / Rate
10,000 / 100,000 = .10
10,000 / .10 = 100,000
10,000 = 100,000 X .10
What if commission is $6,543?
$10,000 Commission Paid
:
Base
Results
:
Rate
$100,000 Purchase Price X 10% (.10) Commission Rate
What is purchase price?
If commission rate is 4.3% (.043)?
6,543
$
:
Results
$152,162.79
X
Base
:
Rate
.043
Commission was $3,000
Property sold for $100,000
What was Rate?
:
Results
Base
:
Rate
X
$3,000
:
Results
Base
$100,000
:
Rate
X
0.03
If the numbers are in the wrong place, you will know it
$100,000
:
Results
$3,000
X
Base
:
Rate
3333%
Commission was $8,000
Rate was 8%
What was price of property?
:
Results
Base
:
Rate
X
$8,000
:
Results
Base
$100,000
:
Rate
X
.08
Seller wants $100,000 net
Seller said add commission to price
Commission is 10%
What is selling price?
:
Results
Base
:
Rate
X
$100,000
:
Results
$111,111
X
Base
:
Rate
100% - 10% = .90
Discount Points
2 points = 2% of prepaid interest
Paid $4,000 in discount points
How much is loan?
:
Results
Base
:
Rate
X
$4,000
:
Results
Base
$200,000
:
Rate
X
.02
Seller made $25,000 profit on $100,000 sale
What is profit %
:
Results
Base
:
Rate
X
25,000
:
Results
100,000 – 25,000
X
Base
:
Rate
.33
or 33%
Investor expects a 10% ROI (return on investment)
Monthly net income is $1,000
What will investor pay for property?
:
Results
Base
:
Rate
X
$1,000 X 12
:
Results
Base
$120,000
:
Rate
X
.10
What did an investor pay if they made 10%
And, sold the home for $100,000
:
Results
Base
:
Rate
X
$100,000
:
Results
Base
$90,909
:
Rate
X
100% + 10% = 1.10
The value of a house is $91,000 today.
What was the original cost if it has depreciated 5% per year
for the past seven years?
:
Results
Base
:
Rate
X
$91,000
:
Results
Base
$140,000
:
Rate
X
100% - (5% X 7) = .65
If a home is worth $91,000 today and has appreciated 5% for
the past 7 years, what was the original price?
:
Results
Base
:
Rate
X
$91,000
:
Results
Base
$67,407
:
Rate
X
100% + (5% X 7) = 1.35
What did the owner originally pay for their home if they sold
it for $98,672, which gave them a 12% profit over the original
cost?
:
Results
Base
:
Rate
X
$98,672
:
Results
Base
$88,100
:
Rate
X
100% + 12% = 1.12
Home Prices
Year % Change Index
2000
100
2001
12.4
112
2002
7.03
121
2003
12.4
135
2004
11.8
151
2005
16.3
176
2006
14.7
202
2007
-0.1
201
2008
-10.7
180
2009
-19
146
2010
-0.7
145
If you get a 90% loan on a $88,500 house, how much more
money must you put down after your $4,500 earnest money?
:
Results
Base
:
Rate
X
$8,850
:
Results
Base
$88,500
:
Rate
X
.10
$8,850 - $4,500 (Earnest Money) = $4,350 Additional down
What did the owner originally pay for their home if they sold
it for $98,672, which gave them a 12% profit over the original
cost?
:
Results
Base
:
Rate
X
$98,672
:
Results
Base
$88,100
:
Rate
X
100% + 12% = 1.12
$5000 commission was paid on a $100,000 sale
What was the rate?
:
Results
Base
:
Rate
X
$5,000
:
Results
Base
$100,000
:
Rate
X
.05
Seller received $100,000, after paying
$5,000 buyer’s closing cost and 5% commission.
What was selling price?
:
Results
Base
:
Rate
X
$100,000 + $5,000 = $105,000
:
Results
Base
$110,526
:
Rate
X
100 – 5% = .95
300 is 3% of what number?
:
Results
Base
:
Rate
X
300
:
Results
10,000
X
Base
:
Rate
.03
What is a 15% ROI on a $1,000,000 investment?
:
Results
Base
:
Rate
X
$150,000
:
Results
$1,000,000
X
Base
:
Rate
.15
• Capitalization Rate = Cap rate = Return on investment = ROI
“T” Formula
•
Results
:
:
• BaseX Rate
• Investor demands a 10% Return; could be 15% or any number
• This as the Rate in the “T” Formula - Must change to decimal .10
–
Rate always goes on bottom right
•
•
•
•
•
•
You may not get the net income, but be “given” the numbers to calculate it
The way to calculate net income is GIVEN
GI
$100,000 Gross Income: 100 apartments renting for $1000 per month
V $5,000Vacancy is 5% (of Gross Income)
E - $30,000 Expenses are 30% (of Gross Income)
N = $65,000 Net Income (Before Taxes)
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•
•
•
•
Net income for one month, so multiply by 12 to get annual income = $780,000
$780,000 is the Result,(top #)
you know the Rate (bottom right #) is .10
you want the Base (bottom left)
Divide the Net Income (Results) of $780,000 by the Rate of .10
$780,000
:
Results
Base
$7,800,000
:
Rate
X
.10
• _____________$780,000___________
:
:
• $7,800,000
.10
X
– Capitalization Rate in this example is 10%
• This apartment has a market value of $7,800,000
– at a capitalization Rate of 10%
• What if it sold for $5,000,000?
•
This means that the market (investors) require a higher
rate of return of 15.6% Calculator said 0.156
• With the “T” Formula, if you get an answer that look wrong,
swap the Base # with the Result # and recalculate
• 7,800,000 / 780,000 would give a rate of return of 1000% and
you would know that is wrong
• Remember to move the decimal point two places to the right
to get the percent .10 = 10%
:
Results
Base
:
Rate
X
:
Results
Base
:
Rate
X
:
Results
Base
:
Rate
X
:
Results
Base
:
Rate
X