Real Estate Math and Calculations Flashcards

A property's assessed value is $180,000 and the mill rate is 20 mills. What is the annual property tax?

Answer: $3,600

20 mills = $20 per $1,000; $180,000 ÷ 1,000 × 20 = $3,600 annual property tax.

Monthly rent is $1,500, paid on the 1st. The closing occurs on the 16th of the month and the seller has collected the full month's rent. Using a 30-day month, how much rent must the seller credit to the buyer at closing?

Answer: $750

The buyer owns days 16–30 = 15 days; daily rent = $1,500 ÷ 30 = $50; 15 × $50 = $750 credit.

A house has a replacement cost of $280,000 and has depreciated 15%. The land is valued at $50,000. Using the cost approach, what is the estimated property value?

Answer: $288,000

Depreciated building value = $280,000 × 0.85 = $238,000; add land: $238,000 + $50,000 = $288,000.

A seller bought a home for $210,000 and sells it for $260,000, paying a 6% commission and $4,000 in closing costs. What is the seller's net profit?

Answer: $30,400

Commission = $260,000 × 0.06 = $15,600; net proceeds = $260,000 − $15,600 − $4,000 = $240,400; profit = $240,400 − $210,000 = $30,400.

A buyer's gross monthly income is $5,500. The back-end DTI limit is 43%. Their existing monthly debt payments total $400. What is the maximum monthly mortgage payment allowed?

Answer: $1,965

Max total debt = $5,500 × 0.43 = $2,365; max mortgage = $2,365 − $400 existing debt = $1,965.

A property is listed at $350,000 and sells for 96% of the list price. The listing agent charges 3% commission on the actual sale price. What is the listing agent's commission?

Answer: $10,080

Sale price = $350,000 × 0.96 = $336,000; commission = $336,000 × 0.03 = $10,080.

A commercial property generates a net operating income of $45,000. An investor requires a 7.5% capitalization rate. What is the maximum the investor should pay for the property?

Answer: $600,000

Value = NOI ÷ cap rate: $45,000 ÷ 0.075 = $600,000.