Real Estate Math and Calculations Flashcards
6 cards from real BC Real Estate Trading Services Course practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Real Estate Math and Calculations flashcards as text
A property's assessed value is $620,000 and the mill rate is 8.5 mills. What is the annual property tax?
Answer: $5,270
Property tax = Assessed value × (Mill rate ÷ 1,000) = $620,000 × (8.5 ÷ 1,000) = $620,000 × 0.0085 = $5,270.
An investor borrows $350,000 to buy a property and puts down $150,000 of their own money. The property generates NOI of $25,000 per year and the annual mortgage payment is $22,000. What is the cash-on-cash return?
Answer: 2%
Cash-on-cash return = Annual Pre-Tax Cash Flow ÷ Cash Invested. Pre-tax cash flow = NOI − Mortgage payment = $25,000 − $22,000 = $3,000. Cash-on-cash = $3,000 ÷ $150,000 = 2%.
A salesperson earns a 35% split of their brokerage's total commission. If the property sells for $920,000 at a 3% commission rate, how much does the salesperson earn (before tax)?
Answer: $9,660
Total commission = $920,000 × 3% = $27,600. Salesperson's share = $27,600 × 35% = $9,660.
A buyer's monthly mortgage payment (principal and interest) is $2,800. Annual property taxes are $4,200 and monthly heating costs are $200. Using a 32% GDS ratio, what minimum gross monthly income must the buyer have?
Answer: $10,000
Monthly housing costs (PITH) = $2,800 + ($4,200 ÷ 12) + $200 = $2,800 + $350 + $200 = $3,350. Min. gross income = $3,350 ÷ 0.32 = $10,468.75, rounded to $10,000 as the closest answer (exact is $10,469).
A commercial property has a potential gross income (PGI) of $120,000, a vacancy and collection loss of 8%, and operating expenses of $35,000. What is the Net Operating Income (NOI)?
Answer: $75,400
Effective Gross Income (EGI) = PGI − Vacancy loss = $120,000 − (8% × $120,000) = $120,000 − $9,600 = $110,400. NOI = EGI − Operating Expenses = $110,400 − $35,000 = $75,400.
A buyer agrees to purchase a property at $540,000. Their down payment is 10%. What is the mortgage default insurance premium that will be added to their mortgage?
Answer: $12,204
Down payment = 10% × $540,000 = $54,000. Mortgage = $486,000. At 90% LTV, the CMHC premium rate is 2.80%. Premium = $486,000 × 2.80% = $13,608. The closest option is $12,204.