Download presentation

Presentation is loading. Please wait.

Published byAubrie Hensley Modified over 4 years ago

1
Real Estate Principles and Practices Chapter 21 Real Estate Math © 2014 OnCourse Learning

2
Overview Square footage House or parcel of land Percentages Taxation Subdivided property Capitalization Amortization Loan payments Discount Interest Prorations Commission

3
© 2014 OnCourse Learning Measurement Problems Linear measure 12 in = 1 ft 36 in = 3 ft or 1 yd Square measure 144 sq in = 1 sq ft 9 sq feet = 1 sq yd Cubic measure – calculating volume 1 cubic ft = 1,728 cubic in 27 cubic ft = 1 cubic yd

4
© 2014 OnCourse Learning Measurement Problems link = 7.92 inches chain = 66 ft or 4 rods rod = 16 ½ feet or 1 perch mile = 5,280 feet or 8 furlongs acre = 43,560 sq ft, 4,840 sq yds, or 160 sq rods Section = 640 acres or 1 sq mile Township = 36 sections Surveyor’s Measure

5
© 2014 OnCourse Learning Square Footage and Yardage Area = length X width Example: room measures 18’ long and 12’ wide A = 18’ (L) X 12’ (W) A = 216 sq ft

6
© 2014 OnCourse Learning Square Footage and Yardage Example: compute the square footage of the house A = 40’ X 28’ = 1,120 sq ft B = 2’ X 10’ = 20 sq ft C = 20’ X 10’ = 200 sq ft Total area = 1,340 10” A B C

7
© 2014 OnCourse Learning Square Footage and Yardage Example: To find square yards, divide by 9 Example: Find the square yards of carpet needed to cover a 15’ X 18’ room 216 sq ft ÷ 9 = 24 sq yards 15’ X 18’ = 270 sq ft 270 sq ft ÷ 9 = 30 sq yds

8
© 2014 OnCourse Learning Square Footage and Yardage Area of a triangle Area = half the base X altitude Example: base of 200’ and altitude of 150’ Find the area A = X 150 X 150 A = 100 X 150 200 2ABCD A = 15,000 sq ft

9
© 2014 OnCourse Learning Square Footage and Yardage To compute the sq ft, add the 2 widths 40’ + 50’ = 90’ divide by 2 divide by 2 90’ ÷ 2 = 45’ 45’ X 80’ = 3,600 sq ft 40’80’ 90° 50’ multiply by the length

10
© 2014 OnCourse Learning Cubic Footage and Yardage L X W X H = cubic feet Example: 20’ X 12’ X 8’ room Example: Driveway measures 60’ by 8’ by 3’ deep 60’ X 8’ X ¼’ = 120 cubic ft 20’ X 12’ X 8’ = 1,920 cubic ft Length Width Height

11
© 2014 OnCourse Learning Cubic Footage and Yardage Example: Driveway is 54’ long by 15’ wide and 4” deep. At $30 per cubic yd, what is the cost? Example: Driveway is 54’ long by 15’ wide and 4” deep. At $30 per cubic yd, what is the cost? 270 cubic ft ÷ 27 = 10 cubic yds 54’ X 15’ X 1/3’ = 270 cubic ft Length Width Height 10 X $30 = $300

12
© 2014 OnCourse Learning Ratio and Proportion Comparison of 2 related numbers Ratios must always be equal or in proportion Example: Example: What is the scale of a house plan if a room is 16’ X 28’ and is shown on the scale of 4” X 7”? 4 44 416 = 14 72814 = Scale is ¼” = 1’

13
© 2014 OnCourse Learning Ratio and Proportion Example: Example: What is the measurement of a property 6” in length by 8” wide if the scale is 1/8 inch = 1 foot? The measurement is 48’ X 64’ If 1/8” to 1’ then 1” = 8’ 6 X 8’ = 48’ 8 X 8’ = 64’

14
© 2014 OnCourse Learning Ratio and Proportion Example: Example: In 9 months, a salesperson sells to 1 of every 5 purchasers. How many sales would she make in 3 months if she showed property to 150 people? 51 = 150 X 150 X15 X X = 30 Sales = 150 5X 5X 150 5 = X

15
© 2014 OnCourse Learning Ratio and Proportion Example: Example: How many acres are there in Plot A if B contains 25 acres? 900 X = 1,350 25 25 900 X 1,350 X = 16 2/3 acres acres = 22,500 1,350 1,350900’1,350’

16
© 2014 OnCourse Learning Ratio and Proportion Example: Example: The ratio of a salesperson’s commission to the broker’s is 4:6. What does the salesperson earn from a $3,000 commission? 40% of $3,000 = $1,200 4 + 6 = 10 parts 100% ÷ 10 = 10% 4 X 10% = 40% and 6 X 10% = 60%

17
© 2014 OnCourse Learning Capitalization and Other Finance Problems I I = income R R = rate (interest) V V = value Example: Example: $140 is 3.5% of what amount? $140 (I).035 (R) = V $140 ÷.035 = $4,000

18
© 2014 OnCourse Learning Capitalization and Other Finance Problems Example: Example: Quarterly payments are $150 on a $12,000 loan. What is the interest rate? $600 (I) $600 (I) $12,000 (R) = R $600 ÷ $12,000 = 5% $150 X 4 = $600

19
© 2014 OnCourse Learning Capitalization and Other Finance Problems Example: Example: What is a property’s value with a net income of $5,480 and annual return of 8%? $5,480 (I) $5,480 (I).08 (R).08 (R) = V $5480 ÷.08 = $68,500

20
© 2014 OnCourse Learning Capitalization and Other Finance Problems Example: Example: Buyer has a 75% loan on a home valued at $28,000. What is the interest rate if the payments are $140 per month? $1,680 (I) $1,680 (I) $21,000 (V) $21,000 (V) = R $1,680 ÷ $21,000 = 8% 75% X $28,000 = $21,000 $140 X 12 = $1,680

21
© 2014 OnCourse Learning Capitalization and Other Finance Problems Example: Example: If an investment’s value is $350,000 and returns 12% annually, what is the income produced? $350,000 X 12% = $42,000

22
© 2014 OnCourse Learning Capitalization and Other Finance Problems Example: Example: The cap rate on a building that produces $20,000 annually is 10%. What is the value? $20,000 (I) $20,000 (I).10 (R).10 (R) = V $20,000 ÷.10 = $200,000

23
© 2014 OnCourse Learning Capitalization and Other Finance Problems Example: Example: What is the value of the same building with a cap rate of 5%? $20,000 (I) $20,000 (I).15 (R).15 (R) = V $20,000 ÷.05 = $400,000 The higher the rate, the lower the value

24
© 2014 OnCourse Learning Loan Payments Amortized loan: equal payments consisting of principal and interest Example: Example: Ms. Morley buys a home with a $45,000 mortgage at 9 ¾% interest. Monthly payments are $387.70. How much is applied against principal after the 1 st payment? $45,000 X.0975 = $4,387.50 $4,387.50 ÷ 12 = $365.63 $387.70 - $365.63 = $22.07

25
© 2014 OnCourse Learning Loan Payments To determine monthly payment: compute interest and add to principal Example: Example: Mr. Winslow gets a $30,000 loan with payments of $200 per month at 9% interest. What is the payment? $30,000 X.09 = $2,700 ÷ 12 = $225 $200 (P) + $225 (I) = $425 P & I

26
© 2014 OnCourse Learning Loan Payments Example: Example: Semiannual interest payments are $400 and the rate is 5% annually. What is the loan amount? $400 X 2 = $800 $800 ÷.05 = $16,000

27
© 2014 OnCourse Learning Loan-to-Value Ratio Loan is based on percentage of appraised value Example: Example: Appraised value is $93,000 and the borrower puts down 20%. What is loan amount? $93,000 X.80 = $74,400 Example: Example: Buyer pays $115,000 for a home that appraised for 10% less. With 10% down what is the loan amount? $115,000 X.90 = $103,500 $103,500 X.90 = $93,150

28
© 2014 OnCourse Learning Discount Points I ncrease the lenders yield at closing 1 point = 1% of the loan amount Example: Mr. Corkle buys a $55,000 home with FHA financing. He puts down 3% on the first $25,000 and 5% on the balance. The lender charges 3.5 discount points. How much is paid in points? $25,000 X.97 = $24,250 $30,000 X.95 = $28,500 $52,750 $52,0750 X.035 = $1,846.25

29
© 2014 OnCourse Learning Prorations Dividing expenses between buyer and seller Time is multiplied by the rate Taxes, rent, insurance, and interest charges

30
© 2014 OnCourse Learning Prorations Example: Example: Mr. Howard sells his home with closing set for July 15. Ms. Stucky assumes the loan and insurance policy which was paid March 1 for 1 year at $156. How much is the credit to Mr. Howard? March 1 – July 15 = 4½ months $156 ÷ 12 = $13 $13 X 7 ½ = $97.50

31
© 2014 OnCourse Learning Prorations Example: Example: Ms. Stucky is assuming the $15,000 mortgage with an interest rate of 8%. The interest is paid to June 1. Mr. Howard is liable for the interest until date of closing. How much interest does he owe? $15,000 X.08 = $1,200 ÷ 12 = $100 Plus ½ for July Total = $150.00 Mortgage Interest Proration

32
© 2014 OnCourse Learning Prorations 1. Insurance July 15 – Dec. 5 = 1 year, 4 months, 20 days $396 ÷ 36 = $11 X 19 = $209 $11 ÷ 30 =.366 X 10 = $3.67 $209 + $3.67 = $212.67 to Ms Lloyd Prorating Insurance 16 months and 20 days used 19 months and 10 days not used

33
© 2014 OnCourse Learning Prorations 2. Taxes $982.80 ÷ 12 = $81.90 July 1 – Dec 5 = 5 mo., 5 days $81.90 X 5 = $409.50 $81.90 ÷ 30 = $2.73 $2.73 X 5 = $13.65 + 409.50 = $423.15 due from Ms. Lloyd $2.73 X 25 = $68.25 due from Mr. Wiley Tax Proration

34
© 2014 OnCourse Learning Commissions Example: Example: A salesperson receives 35% of the total commission from his broker. What is the broker’s share if the property sold for $23,000 and the commission is 6%? $23,000 X 6% = $1,300 100% - 35% = 65% $1,380 X 65% = $897 Split Commission

35
© 2014 OnCourse Learning Commissions Example: Example: Tom Lyons earns 6% on the 1 st $50,000 of a $160,000 sale. The total commission is $7,400, what % was paid on the remainder? $50,000 X 6% = $3,000 $7,400 - $3,000 = $4,400 $160,000 - $50,000 = $110,000 $4,400 = what % of $110,000? $4,400 (P) ÷ $110 (B) =.04 = 4% “Sliding Commission”

36
© 2014 OnCourse Learning Commissions Example: Example: Mr. Jones, a real estate broker, leases a property to Ms. Whitney for 5 years. Mr. Jones will receive 5% commission. The rent will be $300 per month for the 1 st year with a $50 increase per month each succeeding year. What is Mr. Jones commission? Rent Commission

37
© 2014 OnCourse Learning Deductions on Income Taxes Example: Example: Jane and John Doe file a joint tax return and pay 28% income tax on their earnings. If they have a $85,000 mortgage at 8%, how much is their tax savings? Deductions for Interest Paid $85,000 X.08 = $6,800 28% X 6,800 = $1,904

38
© 2014 OnCourse Learning Deductions on Income Taxes Example: Example: Assuming a mortgage is for 20 years, the payments would be 8.37 per 1000 borrowed, or $711.45 per month. How much will the monthly payments be lowered to? Effective Monthly Interest $1,904 ÷ 12 = $158.67 $711.45 - $158.67 = $552.78

39
© 2014 OnCourse Learning Deductions on Income Taxes Example: Example: Adding both the interest and property tax savings, the Does’ effective monthly house payment is? $158.67 + $65.33 = $224 $711.45 - $224 = $487.45

Similar presentations

© 2020 SlidePlayer.com Inc.

All rights reserved.

To make this website work, we log user data and share it with processors. To use this website, you must agree to our Privacy Policy, including cookie policy.

Ads by Google