1 / 32

RealEstate MATH

RealEstate MATH. Barbara Grodaes. Calculator. Press [On/C], [Set] [x], [Set] [9] Remember you only have to press [On/C] once to clear what’s on the display, twice will cancel everything EXCEPT what you have entered into Term and/or Int !

christian-kennedy
Download Presentation

RealEstate MATH

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. RealEstate MATH Barbara Grodaes Yikes!

  2. Calculator • Press [On/C], [Set] [x], [Set] [9] • Remember you only have to press [On/C] once to clear what’s on the display, twice will cancel everything EXCEPT what you have entered into Term and/or Int! • Set changes the buttons to what is green ([Set] and [M+] is [M-]subtract from memory! OR [Set] and [Amort] is Balance! – LOOK at buttons) • Remember to press [=] to display result Yikes!

  3. Calculator Defaults • [Inc] AND [Tax] are annualyou know yearly amount, enter #, press [button]you know monthly amount, enter #, press [Per], then [button] • [Debt] AND [Exp] are monthlyyou know monthly amount, enter #, press [button]you know yearly amount, enter #, divide by [12] [=], then [button] • Number of payments is 12 unless changed –turning [Off] OR pressing [On/C] [On/C] DOES NOT set this back to 12 BUT [Set] [x], [Set] [9] does[Rcl][:]will display #Pmt/Yr to set back to 12, press [1][2] [Set] [:] Yikes!

  4. Calculation of Area • Rectangles and Squares (Area = length x width) • Trapezoids (Area = (length + length) x height / 2) • Triangles (Area = base x height / 2) Yikes!

  5. Metric Conversion • Conversion tables on back of calculator • Real Estate is measured by Metric, not imperial! • When imperial measurement such as yards, feet and inches, change all units to feet before converting to metres(e.g. 3 yards, 2 feet, 3 inches = 11.25 feet, then convert) Yikes!

  6. Formulas – simple interest • I = P x R x TInterest = principal x rate x timeInterest will be a dollar amountrate will be an interest rate shown in % • if you know the interest and any 2 of the other elements, you rearrange the formula to find the 3rd (I always on TOP) Yikes!

  7. Finding 1 out of 3 (PRT?) • I = PxRxT • P = I (RxT) • R = I (PxT) • T = I (PxR) I=InterestP=PrincipalR=RateT=Time For P, R or T, write out the formula and plug in what you know – multiply what is in brackets FIRST, then divide interest by the (answer) Yikes!

  8. Formulas – compound interest • compound semi-annualI = P x R x TInterest = principal x rate x timesame formula, EXCEPT time is 6/12 • To calculate 1 year of compoundedinterest, PxRx.5=?1, then ADD this answer (?1) to the principalnewPxRx.5=?2 add answers (?1+?2=interest for 1 year) Yikes!

  9. Date Math • Calculate date by # of daysMonth[:]Day[:]Year ([+]or[-]) #dayse.g. use this to calculate listing expiration date • Calculate # of days by dateMonth[:]Day[:]Year ([+]or[-]) Month[:]Day[:]Yeare.g. use this to calculate # of days for Interest Adjustment number of days to plug into formula Yikes!

  10. Mortgage Components • [L/A] Loan Amount • [Pmt] Payment • [Term] Number of Amortization Years • [Int] Annual Interest Rate Note: • [Term][Term] Number of periods • [Int][Int] periodic rate of interest • [Pmt][Pmt] will display PIT if annual Tax is enteredbe careful because if [Exp] is entered, this will display PITH Yikes!

  11. Solving Loan Problems • [L/A], [Pmt], [Term] and [Int] are basis for solving loan problemsIf you enter in 3 of the 4 such as [L/A], [Term] and [Int], then press [Pmt], calculator will display blended monthly payment (PI). A second press[Pmt], will display payment including taxes (PIT) as long as annual taxes are already entered. • Once entered, change any variable and re-calculate your new answer with-out re-entering all of the other data! • Don’t press [On/C] [On/C] or you will lose all inputs except [Term] and [Int]! (press only once) Yikes!

  12. Sales Price / Down Payment • In conjunction with [L/A], Sales [Price] and [DnPmt] Down Payment, enter anytwo and solve for the third • [Price] stores or calculates based on [L/A] and [DnPmt] • [DnPmt] stores (either % or $) or calculates based on [L/A] and [Price] • [DnPmt][DnPmt] toggles either % or $Enter Down Payment by entering number less than 100, displays %Enter Down Payment by entering number greater than 100, displays $ Yikes!

  13. Mortgage Insurance Premium % of purchase price % of loan • Up to and including 65% 0.50% • Up to and including 75% 0.65% • Up to and including 80% 1.00% • Up to and including 85% 1.75% • Up to and including 90% 2.00% • Up to and including 95% 3.25% • Up to and including 100% 3.40% Yikes!

  14. Loan-to-Value Calculation • Conventionalloan Loan-to-Value 75% or lower • High-ratioloan Loan-to-Value over 75% to max of 95% • Divide Mortgage required by Sale Price to find Loan-to-Value percentage Mortgage amount required = Loan-to-Value % Sale Price Yikes!

  15. Analyze Loan-to-Value • If conventional, mortgage amount required is [L/A] to use in further calculationsmortgage required = total loan amount • If high-ratio, add Insurance premium % to mortgage amount required and this new amount becomes [L/A] to use in further calculationsmortgage required + insurance premium % = total loan amount Yikes!

  16. Estimating Mortgage Balance • Having already entered [L/A] [Pmt] [Term] and [Int], you can estimate balances prior/end of loan by pressing the [Amort] button • [Set] [Amort] will give you the remaining balance first - continue pressing [Amort] to scroll through same displays of information as [Amort] alone. Yikes!

  17. Mortgage Balance Keystrokes [Amort] finds total interest, principal and remaining balance • 1st press shows range of periods (you can enter a new range of periods here if you want) • 2nd press shows total interest for period range • 3rd press shows total principal for range • 4th press shows remaining balance at end of range Yikes!

  18. Keystrokes Continued [Amort] and [Set] [Amort] displays information concerning years when preceded by single year or range of years. • [#] [Amort] shows info for that (#)year starting with period range of that year – continue pressing button for more information – the total interest and total principal are total for that yearonly and the last press will give you the remaining balance • [#] [Set] [Amort] show same information but starts with remaining balance • [#] [:] [#] [Amort] show information for that series ofyears starting with period range – the total interest and total principal are total for that period only and the last press will give you the remaining balance • [#] [:] [#] [Set] [Amort] show same information for that seriesofyears but starts with remaining balance Yikes!

  19. Keystrokes Continued [Per] [Amort] displays information concerning payments when preceded by single payment or range of payments. • [#] [Per][Amort] shows info for that (#)payment starting with period range of that payment – continue pressing button for more information – the total interest and total principal are total for that paymentonly and the last press will give you the remaining balance of mortgage • [#] [Set] [Per] [Amort] same information but startsremaining balance • [#] [:] [#] [Per] [Amort] show information for that series ofpayments starting with period range – the total interest and total principal are total for that series of payment only and the last press will give you the remaining balance • [#] [:] [#] [Set] [Per] [Amort] same information for that seriesofpayments but starts with remaining balance Yikes!

  20. Interim Financing Financing necessary for a short period of days or weeks is Interim Financing. The cost of this financing is calculated using simple interest and you will know the P, R and T however the T is #of days/365I = P x R x TInterest = principal x rate x #of days/365 Yikes!

  21. Payout Penalty Payout Penalty is the greater of 3-month interest penalty or interest differential • Mortgage balance x mortgage interest rate x 3/12 = ___ • Mortgage balance x (mortgage interest rate subtract (-) current interest rate) x number of years remaining on term = ____ Yikes!

  22. Averaging Mortgage Interest • You average mortgage interest to determine which is the least cost for your client – refinance a new first mortgageORassume an existing mortgage and arrange a new 2nd mortgage • Determine what is most economical Yikes!

  23. Calculating Averaging • Existing mortgage x interest rate = ____Second mortgage x interest rate = ____Add both answers = InterestAdd both mortgages= Principal • R = I R= Interest (PxT) (Principal x1) • R = answer x 100 = ____% Yikes!

  24. Qualifying the Buyer • Five Cs of Credit for Qualifying • Character • Capital • Capacity • Collateral • Credit Yikes!

  25. Debt Service Ratios • Gross Debt less than 32% of gross income to pay PITH (+1/2 condo fees) • Total Debt less than 40% of grossincome to pay PITHOD (+1/2 condo fees) PI + T + H + (1/2 cf)+ OD Gross Monthly Income Less than 32%Less than 40% 100 = ____% x Yikes!

  26. Remember Defaults • [Inc] AND [Tax] are annualyou know yearly amount, enter #, press [button]you know monthly amount, enter #, press [Per], then [button] • [Debt] AND [Exp] are monthlyyou know monthly amount, enter #, press [button]you know yearly amount, enter #, divide by [12] [=], then [button] • Number of payments is 12 unless changed –turning [Off] OR pressing [On/C] [On/C] DOES NOT set this back to 12 BUT [Set] [x], [Set] [9] does[Rcl][:]will display #Pmt/Yr to set back to 12, press [1][2] [Set] [:] Yikes!

  27. Qualify Using Calculator • First, [Rcl] [Qual1] ensure set at 32.00-40.00. If not displayed as this, enter [3][2] [:] [4][0] [Qual1] • Enter [Inc], [Debt], [Exp] [Tax] and [L/A], then [Qual1] [Qual1] to display GDSR – TDSR • Enter [Inc], [Debt], [Exp] [Tax] (but NOT [L/A]), then [Qual1] [Qual1] to display maximum loan amount qualified for(remember this max includes ins. fees! – not net loan for deal) • Enter [L/A], [Term], [Int] [Tax] and [Exp], then [Qual1] [Qual1] to display Income necessary to verify a mortgage amount Yikes!

  28. Qualify Continued • If qualifying for condo, include ½ condo fees with heat in the [Exp] button • Remember [Qual1] [Qual1] displays different values depending on what you have previously entered • Good idea to [On/C] [On/C] first when you want the [Qual1] [Qual1] to display the different values Yikes!

  29. Capitalization Rate • V = IR • R = IV • I = RxV V=ValueI=Net IncomeR=Capitalization Rate This formula is used when an investor uses a capitalization rate with the net operating annual income to determine the maximum an investor can pay to achieve the value. Net Income Cap Rate Value Yikes!

  30. City Formula • V = TR • R = TV • T = VxR V=Assessed ValueT=TaxesR=Mill Rate Taxes = Assessed Value x Mill Rate x $.001. Taxes Assessed Value Mill Rate Yikes!

  31. Qualify Formula • I = PITG • G = PITI • PIT = GxI PIT=principal, interest, tax paymentI=IncomeG=GDSR or Gross Debt Service Ratio PIT GDSR Income Yikes!

  32. Using Memory Functions • [Rcl] [M+] recalls and displays total value in memory • [M+]adds the displayed value to memory • [Set] [M+]subtracts displayed value from value in memory oradds negative number to memory • [Rcl] [Rcl] displays total value in memory and clears memory • [Set] [Rcl]clears memory without changing displayed value • [Set] [Rcl] [M+]clears memory and puts displayed value into memory Yikes!

More Related