7 Practical Mathmatics

# 7 Practical Mathmatics - CHAPTER 7 PRACTICAL REAL ESTATE...

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1 CHAPTER 7 PRACTICAL REAL ESTATE MATHEMATICS

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2 DECIMALS Percentage Decimal Fraction 0.045 45/100 10 0.10 1/10 12½ 0.125 1/8 16-2/3 0.1667 1/6 33-1/3 0.3333 1/3 125 1.25
3 BASIC FUNCTIONS Addition: 126.06 5.715 400.800 532.575 Subtraction: \$18,450.60 425.20 \$18,025.40

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4 Multiplication: 7.064 Multiplicand x37.60 Multiplier 265.6064 Product
5 Division: 270.000 ÷ 0.045 = 6,000 Where: 270.000 dividend ÷0.045 divisor 6,000 quotient Where: 72.48 dividend ÷24 divisor 3.02 quotient

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6 M R P Made = Paid x Rate Paid = Made ÷ Rate Rate = Made ÷ Paid ÷ x ÷
7 TABLE MADE PAID RATE Income Invest. % Return Comm. SP % Comm. Net Inc Value Cap Rate Int. Prin. Rate x Time Discount Loan Bal. % Discount Area L W

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8 INVESTMENT PROBLEMS Caution: When you are given monthly figures, always convert them to annual figures. \$800 per month x 12 months = \$9,600 per year.
9 Income Rate Amt. Invested Made = Income Paid = Amount Invested ÷ ÷ x Rate = Made ÷ Paid Paid = Made ÷ Rate Made = Paid x Rate

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10 INVESTMENT PROBLEMS PROBLEM 1 If an investor want to earn \$50 per month from a savings account and the account pays 5% simple interest, how much must be put in the account? Income = \$50 x 12 = \$600 per yr. Amount = \$600 ÷ 0.05 = \$12,000
11 INVESTMENT PROBLEMS PROBLEM 2 An investor bought a small lot for \$45,000. Assume the lot was later listed for sale and sold for \$60,000. What is the rate (%) of profit the investor made on this sale? Paid = \$45,000. Made = \$15,000 = (\$60,000 – \$45,000). \$15,000 ÷ \$45,000 x 100 = 33%

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12 DISCOUNTING NOTES PROBLEM 3 A \$5,000 note to a private lender is to be paid off in 12 months. The borrower is to pay the \$5,000 plus 8% interest on the due date. An investor purchases the note today at a discount rate of 10%. What is the investor’s rate of return on amount invested.
13 \$5,000 x 0.08 =\$400 (interest to the lenders on due date). \$5,000 x 0.1 = \$500 (discount allowed investor). Made =\$900 (\$400 + \$500) Paid = \$5,000 less 10% = \$4,500 Made ÷ Paid = Rate \$900.00 ÷ \$4,500 = 20%

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APPRAISAL PROBLEMS PROBLEM 4 A triplex nets an income of \$500 per month per unit. Purchaser demands an investment rate (capitalization rate) of 9%. What is maximum to be paid for triplex? \$500 per unit x 3 unit x 12 months = \$18,000
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## This note was uploaded on 10/04/2011 for the course REAL ESTAT 11 taught by Professor Robertrooks during the Winter '08 term at El Camino.

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7 Practical Mathmatics - CHAPTER 7 PRACTICAL REAL ESTATE...

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