Real Estate Math Formulas, Slides of Real Estate Management

Download Real Estate Math Formulas and more Slides Real Estate Management in PDF only on Docsity! 1/6 Real Estate Math Formulas Excise Tax (Revenue Stamps) Rev'd Sales Price/500 = Excise Tax Title Insurance Sales Price /1000 x 2 (OR Sales Price/500) Property Tax Tax Rate x Assessed Value/100 = Annual tax Pro-rated tax = Annual tax/360 = tax per day. Multiply by days being pro-rated 360 = Days in Banker's Year. Gain or Loss on Principal Residence Gain/Loss = Amount Realized - Adjusted Basis Amount Realized = Selling Price - Closing Costs to sell. Adjusted Basis = Orig. purchase price + closing costs to buy + permanent capital improvements. Qualifying a Buyer - Min. Income needed PITI/ 28%= minimum mo. income for Housing alone PITI / 36% = minumum mo. income for combined exp. Qualifying A buyer using income ratio & PITI only: Mo. Income x 28% = Maximum PITI 2/6 PITI + Expenses: Mo Income x 36% = Maximum PITI + Expenses Max Loan Mo. Income x .36 = Max PITI recur. payment Max PITI recur- Tax/Ins/Recurring Exp. = PI PI = Factor x loan/1000 PI / Factor = Loan (in thousandths) Loan in thousandths x 1000 = Max Loan Qualifying a buyer using income & debt ratios. Mo income x 28% (31℅ FHA) = max payment to qualify. Mo Income + combi expenses x 36% (43℅ FHA) = max payment to qual.) VA ratio is only 41℅ of income. Profit & Loss Current Value / Original Price = Rate of Profit or loss or Current-Original=Amount gained or lost / Original= % of loss or gain. NOTE: Original price is 100% basis. When theres a profit, the rate will be over 100%; when there's a loss, the rate is under 100%. Rate of 1.39 = 39% gain Rate of .90 = 10% loss Area of square or rectangle Length x Width = Area Area of Triangle Base x Height / 2 Cubic Feet Length x Width x Height 5/6 When Subject is Inferior, subtract from the comp's price. Cost Approach to Valuation uses what Factors? Simple (Straight-line) Method of Depreciation. Cost per sf of building; Economic Life Effective Life Lot Value Economic Life = # of years a bldg will have value considering depreciation. Effective Life = Age of a building based on its condition, not actual age. Cost Approach Valuation: 5 Stage Formula: 1 - Cost of Building: sf of bldg x cost per sf = Cost of Building 2 - Cost of Building / Economic Life = Annual Loss (Depreciation) 3 - Annual Loss x Effective Age = Total Depreciation Loss 4 - Building Cost - Total Depreciation = Depreciated Value of Bldg. 5 - Depreciated Value of Bldg. = Lot Price = Total Current Value Market Abstract Method of Depreciation Replacement cost of comps - their sales prices = Amount of Depreciation Gross Rent Multiplier (GRM) = Sales price / Rent # of months it will take to recoup price paid. Calculating Used in Sales Comparison to account for appreciation in 6/6 Appreciation value in the time since Comp sold. Appreciation Rate x Comp's value = Annual Appreciation. Annual Appreciation / 12 - Monthly Appreciation Income Approach to Value (Commercial, esp. rental property) NOI / Cap Rate = Value (NOI = Eff. Income - Operating Expenses)