Real Estate Equations

Updated: Jan 30

MATH EQUATIONS


Before Mike was practicing real estate, he needed to pass the Federal and State pre licensing exams to become a licensed real estate agent in Massachusetts. He also needs to take continuing education classes every 2 years to keep his license up to date. There are strict guidelines in place to protect all buyers and sellers and any other client MVP takes on. Below are many calculations you can look over to become familiar with as they may help in your home search! Feel free to use this and come back to whenever necessary as you are educating yourself about the real estate market.


Percentages:

- Total Amount x % = Percentage Amount

- Percentage Amount / Total Amount = %

- Percentage Amount / % = Total Amount


Tax rate & Assessed Value:

- Market Value $ x Assessment % = Assessed Value $ - Property Tax $ / Assessed Value $ = Annual Tax Rate % - Assessed Value $ x Annual Tax Rate % = Annual Property Tax $


Tax Per Dollars Valuation (e.g. $10 per $100)

- Dollars Per Tax Unit / Total Tax Unit = Annual Tax Rate %

- Annual Tax Rate % x Total Tax Unit = Dollars Per Tax Unit


Loans & Points

- Sales Price $ x Down payment % = Down payment $

- Down payment $ / Sales Price = Down payment % - 100% - Down Payment % = Loan % - Sales Price x Loan % = Loan Amount

- Sales Price $ – Down payment $ = Loan Amount $ - Loan Amount $ + Down Payment = Sales Price $ - Loan Amount $ / Loan % = Sales Price $ - Down Payment $ / Down Payment % = Sales Price $

- Loan Amount $ x Points % = Points $

- Points $ / Loan Amount $ = Points %


Interest Rates

- Loan Total $ x Interest % = Annual Interest $

- Annual Interest $ / Loan Total $ = Interest %


Commissions

- Sales Price $ x Commission % = Commission $

- Commission $ / Sales Price $ = Commission %

- Commission $ / Commission % = Sales Price


Profits and Investment Costs

- (Original Purchase Price + Investment Costs) x (1 + Profit %) = Total Sales Price

- (Sales Price / (1 + Profit %)) – Investment Costs = Original Purchase Price


Sales Price & Net Profit

- (Net Seller’s Profit $ + Expenses $) / (100% - Commission %) = Gross Sales Price

- (Sales Price $ - Expenses $) – (Sales Price $ x Commission %) = Net Seller’s Profit $


Proration

- Total Annual $ to be Pro-rated / Days in Year = Daily $

- Daily $ x Days to Be Prorated = $ To Be Prorated


Square Feet & Price Per Square Feet

- Length x Width = Square Feet - Total Square Feet x $ Per Square Foot = Total $ - Total $ / Total Square Feet = Price Per Square Foot

- Total $ / Price Per Square Foot = Total Square Feet


Lots

- Lot Length x Lot Width = Lot Square Feet - Total Parcel Square Feet / Lot Square Feet = Number of Lots

- Number of Lots x Lot Square Feet = Total Parcel Square Feet

- Total Parcel Square Feet / Number of Lots = Lot Square Feet


Acres

- 43,560 x Number of Acres = Square Feet

- Square Feet / 43,560 = Number of Acres


Amortized Loans

- Annual Interest $ / 12 = Monthly Interest $ - Monthly Payment $ – Monthly Interest $ = Principal Reduction $ - Total Outstanding Loan $ – Principal Reduction $ = Total Outstanding Loan $ After Payment


Capitalization (Cap) Rate

- Total Price $ x Capitalization Rate % = Net Operating Income $

- Net Operating Income $ / Capitalization Rate % = Total Price $

- Net Operating Income $ / Total Price $ = Capitalization Rate %


Gross Rent Multiplier (GRM)

- Total Price / Monthly Rent = Monthly GRM

- Monthly Rent x Monthly GRM = Total Price


Cash on Cash Return on Investment (CoCROI)

- Cash Flow Before Taxes / Equity Invested = CoCROI %













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