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Questions and Answers
What is the formula for calculating interest?
What is the formula for calculating interest?
How do you find the commission from a sale price and rate?
How do you find the commission from a sale price and rate?
Commission equals price times rate percentage.
To find a percentage, you divide the smaller number by the bigger number.
To find a percentage, you divide the smaller number by the bigger number.
True
How many square feet are in an acre?
How many square feet are in an acre?
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What is the formula for calculating cap rates?
What is the formula for calculating cap rates?
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How much are documentary stamps per $500 of sales price?
How much are documentary stamps per $500 of sales price?
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What does the Gross Rent Multiplier (GRM) measure?
What does the Gross Rent Multiplier (GRM) measure?
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Study Notes
Interest
- Interest is calculated by multiplying the present value of the loan (PV) by the interest rate.
- To find daily interest, divide by 365; for monthly interest, divide by 12.
- Formula: PV x % = one year of interest.
Commissions
- Commissions are determined using the formula: Price x Rate (%) = Commission (C).
- Commissions may need to be split between the broker and the agent.
- For a $100,000 sale at a 6% rate with a 50/50 split, the total commission is $3,000.
- If the associate receives 70% of the commission, they earn $2,100.
Percentages
- To calculate a percentage, divide the smaller number by the larger number.
- For example, with a sale price of $80,000 and a commission of $4,800, the percentage is 4,800/80,000 = 0.06 or 6%.
Acres
- There are 43,560 square feet in an acre.
- To convert lot size to acres, divide the total square footage by 43,560.
- For example, a lot measuring 330 x 330 square feet equals 108,900 sq ft, or 2.5 acres (108,900/43,560).
- A 150 x 150 lot equals 22,500 sq ft, or approximately 0.52 acres (22,500/43,560).
Cap Rates
- Capitalization Rate (Cap Rate) measures the rate of return on a real estate investment based on expected income.
- Cap Rate can help estimate potential returns on investment properties.
- Formula: CR = Yearly Income (YI) / Total Value (TV).
Documentary Stamps
- The cost of documentary stamps is 75 cents for every $500 of the sales price.
- Round the sales price up to the nearest $500 for calculation.
- For a purchase price of $138,125, you would calculate: 138,500/500 = $277 in stamps.
Gross Rent Multiplier (GRM)
- GRM is the ratio of the property price to its annual income from rent.
- It indicates how many years it would take for the property to pay for itself based on gross rents received.
- Formula: GRM = Selling Price (P) / Gross Rents (R).
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Description
Explore the essential math formulas used in real estate transactions with these flashcards. Learn about interest calculations, commissions, and more to enhance your understanding of real estate finance. Perfect for students and professionals alike!
