Sales Course  Math Review  Gold Coast School of Real Estate 1

Sales Course Math Review Gold Coast School of Real Estate 1

P 162 How many acres are in a tract identified as the N½, of the SE ¼, of the SW ¼, of the N½? 640 2 4 4 2 10 acres Copyright Gold Coast Schools 2

P 166 A property measures 420 feet along the highway and contains 12 acres. What is the depth of the tract? If ? x 420 522,720 (12 x 43,560) Then ? 522,720 420 1,244.57 Check answer: 420 x 1,244.57 43,560 12 acres Copyright Gold Coast Schools 3

P 166 A builder is developing a 550 X 970 piece of property. Each lot will be approximately 80 X 110. Setback requirements will be 25,750 sq. feet. The pool will be 80 X 100 and the clubhouse will be 75 X 90. If each lot sells for 12,000, what will be the full amount realized by the builder? 4

550 X 970 533,500 sq feet available 533,500 - 8,000 (pool) - 6,750 (clubhouse) - 25,750 (setback) 493,000 available for lots 493,000 Then 8800 56 lots 56 X 12,000 672,0 00 5

P 166 A developer is subdividing a 15 acre tract into lots measuring 80 X 110. Each lot has a perimeter of 380 feet and will sell for 6500. The developer has allowed 151,800 square feet for required streets and sidewalks. What is the maximum number of salable lots that will be realized? 6

15 X 43,560 653,400 sq feet available 653,400 -151,800 501,600 80 X 110 8800 sq feet each lot Then 501,600 8800 57 lots 7

P 183 A seller wants to net a minimum of 280,000 from the sale of her home. If closing costs are expected to be 4,000 and her broker charges a 6% commission, her home must sell for: 280,000 4,000 94% (100%-6%) 302,127.66 Copyright Gold Coast Schools 8

P 184 A house listed for 375,000, sold for 94% of the list price. The total commission was 6%. The commission was split equally between the cooperating brokers. If the selling agent is on a 70% split, what is the broker’s share of the 375,000 x 94% x 6% 21,150 commission? 21,150 2 10,575 10,575 x 30% (brokers share) 3,172.50 Copyright Gold Coast Schools 9

P 196/7 The interest rate on a borrower’s loan was 7%. The buyer also paid 2 points. What was the lenders effective yield? Each Point increases yield by 1/8% 1 .125 8 7.25% 10

p 196/7 A borrower qualifies for a loan at 6.5%. Prevailing rate is 7%. How many points will be paid to “buy down” the interest rate on behalf of the buyer? Prevailing rate 7% Buyer qualifies -6.5% “Buydown” .5% or 4/8 4 points (Each Point increases the lenders yield by 1/8%) 11

P 200/1 A couple had a combined gross monthly income of 4,750, a house payment of 1,150 and other monthly obligations including: Car payments Student loan Credit card 285 125 550 What are their Housing Expense and Total Obligations Ratio? Do they qualify for a loan? 12

Payment (PITI) Gross Monthly Housing Expense Income Ratio 1,15 .24 (24%) 0 4,75 0 PITI all monthly Total Obligations debts Ratio Gross Monthly 1,150 Income .44 (44 960 %) 4,750 13

P 201/2 A property sells for 200,000 with a 40,000 down payment. What is the loan to value ratio? SP DP Loan LTV 200,000 40,000 160,000 Loan Value 160,000 200,000 80% 14

P 201/2 The loan amount is 375,000 and the loan to value ratio is 80%. What is the purchase price of the property? If ? x 80% 375,000 468,75 Then 375,000 0 80% Copyright Gold Coast Schools 15

P 218 Loan 72,000 for 30 years at 9.5% interest Payments - 605.42 What is the total amount of interest paid in the third month? What is the total amount of principal paid in the third month? What is the balance due after the third month? 16

Bal x Rate 12 Balance 72,000.00 Payment 605.42 605.42 605.42 Interest Pmt–Int Principal Bal–Prin Balance 17

Balance 72,000.00 Payment 605.42 Interest 570.00 Pmt–Int Principal 35.42 Bal–Prin Balance 71,964.58 Bal x Rate 12 605.42 605.42 18

Balance 72,000.00 71,964.58 Payment 605.42 605.42 Interest 570.00 569.72 Pmt–Int Principal 35.42 35.70 Bal–Prin Balance 71,964.58 71,928.88 Bal x Rate 12 605.42 19

Balance 72,000.00 71,964.58 71,928.88 Payment 605.42 605.42 605.42 Interest 570.00 569.72 569.44 Pmt–Int Principal 35.42 35.70 35.98 Bal–Prin Balance 71,964.58 71,928.88 Bal x Rate 12 * * 71,892.90 * 20

P 243 An investor purchased a duplex that was rented for 475 per month. The closing will be on March 19 with the day of closing belonging to the buyer. What is the amount of the proration and how will it be entered on the closing statement? a) 199.19, debit seller, credit buyer b) 183.87, debit buyer, credit seller c) 275.81, debit buyer, credit seller d) 398.38, debit seller, credit buyer 21

3/19 18 days 13 days 3/18 3/1 3/19 3/31 31 days # Days X Rent 31 Seller Debit 199.19 13 X 475 31 Credit 199.19 Buyer Debit Credit 199.19 22

P 245 Property taxes for the year are 840. The closing day is July 16 with the day of closing belonging to the seller. Using a 365 day/year, which is the correct entry for the closing statement? a) debit seller 386.63 b) debit buyer 386.63 c) debit seller 453.37 d) debit buyer 453.37 23

197 days 7/16 1/1 7/17 12/31 365 days # Days X taxes 365 197 X 840 365 Seller Debit 453.37 Credit 453.37 Buyer Debit Credit 453.37 24

P 247/8 You are reviewing a HUD-1 Uniform Closing Statement and note that the Documentary Stamp Tax on the Deed was 2,800. The Stamp tax on the Promissory Note was 1,120. What is the loan to value ratio in this transaction? Copyright Gold Coast Schools 25

S.P. 100 x .70 2,800 (reverse the math sequence) 2,800 .70 x 100 400,000 (Sales Price) Mortgage 100 x .35 1,120 (reverse the math sequence) 1,120 .35 x 100 320,000 (Loan) Loan 320,000 Value 400,000 80% Copyright Gold Coast Schools 26

P 247/8 A property sold for 310,010 and the buyer assumed the balance of the sellers loan of 250,000 and received a purchase money mortgage in the amount of 10,000 from the seller. What are the total state documentary stamp taxes on the deed? 310,010 100 3,100.10 (round up) 3,101 x .70 2,170.70 Copyright Gold Coast Schools 27

P 247/8 Selling Price: 280,210 Subject to Mortgage: 220,000 Assumed Mortgage: 20,260 Purchase Money Mortgage: 10,520 S x .002 I 10,520 21.04 10,520 100 x .35 N 105.20 (round up) 106 x .35 280,210 100 x .70 2,802.10 (round up) 2,803 x .70 1,962.10 37.10 20,260 100 x .35 202.60 (round up) 203 x .35 71.05 Copyright Gold Coast Schools 28

P 247/8 A vacant parcel of land is located in the NE ¼ of the SW ¼, of the NW1/4, of the SW ¼ of Section 17, T18S, R4W. The land is selling for 15.00 per square foot. Calculate the State Documentary Tax on the Deed. 640 4 4 4 4 2.5 acres 2.5 x 43,560 x 15 1,633,500 1,633,500 100 x .70 11,434.50 Copyright Gold Coast Schools 29

P A subject property has 4 bedrooms,265/6/7 two baths, 2-car garage and a professionally landscaped lot. A comparable sold for 218,900. It has a fireplace and 3 bedrooms. A fireplace is valued at 1,500, bedroom at 7,000 and professional landscaping at 5,000. What is the adjusted sales 218,900 price of the CIA/CBS comparable property? 7,000 -1,500 5,000 229,400 Copyright Gold Coast Schools 30

P 267 You are appraising a 5 year old single family residence. The total living square foot area is 2,700 sq. feet and the garage is 1,000 sq. feet. Cost estimating services base construction cost per sq. ft of livable area at 72.00 and 40.00 per sq. ft for the garage. Calculate the2700 reproduction cost X 72.00 new of the structure. 194,400 1000 X 40.00 40,000 234,400 31

Calculate the reproduction cost of the following property using the CostDepreciation Approach to Value: Lot size: Land Value: Dimensions of structure: Construction per sq. ft est.: Age of building: Economic life: P. 269 200 x 100 50 / Sq. ft. 100 x 125 250 7 years 60 years 100 x 125 x 250 3,125,000 Copyright Gold Coast Schools 32

In the previous problem what is the depreciated value of the building? P. 269 3,125,000 60 x 7 364,583 total dep. 3,125,000 – 364,583 2,760,417 dep. value Copyright Gold Coast Schools 33

P 269 Joe purchased a building valued at 295,000 with an estimated 25 year useful life. Joe owns the building for 6 years. Using straight line depreciation find the depreciated value of the building. Cost - 70,800 (295,000 25 -Depreciation 295,000 X 6) 224,200 Building Value -34

P 271/2 A property could produce 100,000 annually. The operating expenses are 38,000 and the vacancy and collection loss is 5%. If overall capitalization rate is 10% what is the of the property? PGI value 100,00 - VC EGI I - OE R 0 -5000 95,000 -38,000 57,000 V (100,000 X 5 %) 570,00 57,000 0 10% 35

Using the following information to compute an estimate of value for an income producing property. Round your answer to the nearest dollar. P 271/2 Number of Units: 10 Rental / Unit / Month: 1,200 Vacancy & Collection: 5% of PGI Property Taxes: 18,000 Property Insurance: 6,000 Variable Expenses: 23,000 Monthly Mortgage Payment: Copyright Gold Coast Schools 36

PGI 144,000 (10 x 1,200 x 12 months) -VAC -7,200 (5% of PGI) EGI 136,800 - OE -52,500 (Taxes Ins. VE Reserve) NOI 84,300 I RV 84,300 12% 702,500 37 Copyright Gold Coast Schools

P 272/3 A Seller is listing their duplex for 193,000. The annual rent for both units is 28,800. What is the value of the duplex using the GRM method based on the following recent sales inSale the immediate area? Price Annual Rent (both units) 187,000 209,000 179,000 26,400 30,960 24,960 38 Copyright Gold Coast Schools

P 272/3 A Seller is listing their duplex for 193,000. The annual rent for both units is 28,800. What is the value of the duplex using the GRM method based on the following recent sales inSale the immediate area? Price Annual Rent (both units) 187,000 209,000 179,000 26,400 7.08 30,960 6.75 24,960 7.17 21 21 3 7 7 (GRM) X 28,800 201,600 Copyright Gold Coast Schools 39

P 305 What is the operating expense ratio of a property that has an effective gross income of 138,000 and net income of 82,800? EGI -0E NOI 138,000 ? 82,800 138,000 – 82,800 55,200 (operating exp.) Operating Expenses 55,200 Effective Gross Income 138,000 40% Copyright Gold Coast Schools 40

P 306 Two 100 foot lots were purchased for 20,000 each. The two lots were divided into 3 lots and sold for 250 per front foot. What was the percentage Made of profit? Percentage of Profit or Paid Loss Paid: 40,000 (two 100 ft. lots for 20,000 each) Sold: 50,000 (200 ft. x 250 per front foot) Made: 10,000 ( 50,000- 40,000 25% 10,000) Profit Made 10,000 41

P 306 Three 60 x 80 lots were purchased for 7.50 sq/ft. The lots were sold for 60,000 each. What was the percentage of profit? Made Percentage of Profit or Paid Loss Paid: 108,000 (60 x 80 ft x 7.50 sq. ft x 3 lots) Sold: 180,000 (3 lots @ 60,000 each) Made: 72,000 ( 180,000 - 108,000 72,000) 67% Profit Made 72,000 42 Paid 108,000

P 307 A 100-unit apartment building sold for 3,000,000. Closing costs are 26,300 and the land represents 30% of value. How much depreciation can be taken each year for income tax purposes? 3,000,000 26,300 3,026,300 x 70% (bldg %) 2,118,410 2,118,410 27.5 77,033.09 Copyright Gold Coast Schools 43

P 307 If the IRS annual depreciation allowance for a small shopping plaza, containing 12 stores is 25,000, and the land represents 20% of the purchase price, the purchase price was: 25,000 x 39 975,000 If ? x 80% 975,000 Then 975,000 1,218,75 80% 0 Copyright Gold Coast Schools 44

P 319/320 If the property tax rate is 35 mills, how would it be expressed as a decimal? MILLS MOVE BACKWARDS THREE SPACES 3 2 1 .0 3 5. 35. MILLS .035 45

P 327 The city decided to add a sidewalk in one neighborhood and is assessing all local owners to pay for this improvement. If a property owners lot is 85 x 150 feet, and the cost per front foot is 90: 1) How much will the owner save if the city is paying 30%? 2) What is the owners portion of the special assessment? Copyright Gold Coast Schools 46

85’ 85’ 85’ X 90 1) 7,650 X 30% 7,650 2,295 2,295 1,147.50 2 2) 7,650 X 70% 5,355 5,355 2,677.50 2 47