Real Estate Math and Calculations Flashcards
7 cards from real Wisconsin Real Estate License practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Real Estate Math and Calculations flashcards as text
An investment property generates $36,000 in annual net operating income and is valued at $400,000. What is the capitalization rate?
Answer: 9%
Cap rate = NOI ÷ value: $36,000 ÷ $400,000 = 0.09 or 9%.
A rental property sells for $300,000 and generates $2,500 per month in gross rent. What is the gross rent multiplier using monthly rent?
Answer: 120
GRM (monthly) = sale price ÷ monthly rent: $300,000 ÷ $2,500 = 120.
A buyer takes out a $200,000 mortgage at 5% annual interest. What is the interest charge for the first month?
Answer: $833
Monthly interest = $200,000 × 0.05 ÷ 12 = $833.33.
A buyer pays 2 discount points on a $180,000 mortgage loan. How much are the points?
Answer: $3,600
One point equals 1% of the loan amount; 2 points = 2% × $180,000 = $3,600.
A buyer's gross monthly income is $6,000. Their front-end debt-to-income ratio should not exceed 28%. What is the maximum allowable monthly housing payment?
Answer: $1,680
$6,000 × 0.28 = $1,680 maximum monthly housing payment.
A property was purchased for $200,000 and sold three years later for $230,000. What is the total percentage appreciation?
Answer: 15%
Appreciation = ($230,000 − $200,000) ÷ $200,000 = $30,000 ÷ $200,000 = 15%.
Straight-line depreciation is applied to a commercial building valued at $300,000 (land excluded) over 39 years. What is the annual depreciation deduction?
Answer: $7,692
Annual depreciation = $300,000 ÷ 39 years = $7,692.31.