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Math Guide
| Term | Definition |
|---|---|
| 1 Point | 1 Point=1% of the loan principal |
| Adjusted basis (investment property) | basis + cost of improvements + qualified closing costs - realized depreciation = adjusted basis (investment property) |
| Adjusted basis (primary residence) | basis + cost of improvements + qualified closing cost = adjusted basis (primary residence) |
| Annual interest formula | principal x interest rate = annual interest |
| Appraised value (using comps) | total comps ÷ number of comps = appraised value |
| Buildable lots per tract | 43,560 sq ft per acre x percent available of lots = sq ft available for lots per acre sq ft available for lots per acre x number of acres in tract = total available sq ft total available sq ft ÷ minimum sq ft per lot = number of buildable lots in tract |
| Cap rate | NOI ÷ property value = cap rate |
| Capital gain | realized gain - adjusted basis = capital gain |
| Cost per point | total cost of points ÷ number of points = cost per point |
| Cost ratio (comparing mortgages) | 30-years total loan cost ÷ 15-year total loan cost = cost ratio |
| Depreciable basis | purchase price + acquisition costs + renovations - land value = depreciable basis |
| Depreciation (%) | age of property ÷ total useful life = depreciation(%) |
| Depreciation allowance | depreciable basis ÷ useful = annual IRS depreciation deduction |
| Depreciation cost ($) | reproduction cost x depreciation (%) = depreciation cost($) |
| Discount point fees | principal balance x loan points = discount point fees |
| Effective gross income | property value + property income - vacancy cost = effective gross income (EGI) |
| Gross rent multiplier | property price ÷ annual rent income = gross rent multiplier (GRM) |
| Housing expense (front and) ratio | monthly payment ÷ monthly income = payment-to-income ratio |
| Interest | interest rate x principal = interest |
| IRV | net operating income ÷ capitalization rate = property value |
| Loan principal | cost per point x 100 = loan principal |
| Loan-to-value ratio | loan amount + purchase price = loan-to-value taio |
| Month 2 balance | original principal balance - P1 = month 2 balance |
| Monthly income | monthly payment balance ÷ payment-to-income ratio = monthly income |
| Monthly interest formula | annual interest ÷ 12 months = monthly interest |
| Monthly interest payment | interest rate x principal balance ÷ 12 months = monthly interest payment |
| Monthly payment 1 | monthly income ÷ payment-to-income ration = monthly payment |
| Monthly payment 2 | monthly x debt-to-income ratio - other debt = monthly payment |
| Net operating income | EGI - operating expenses = net operating income (NOI) |
| Net to seller | Seller's debits = net to seller |
| Part | total x percentage = part |
| Percentage | part ÷ total = percentage |
| PITI payment | principal + interest + taxes + insurance = PITI |
| Portion of first payment going towards interest | (interest rate x principal balance) ÷ 12 = l 1 |
| Portion of first payment going towards principal | monthly payment - l 1 = P1 |
| Portion of second payment going towards interest | (interest rate x month 2 balance) ÷ 12 = 12 |
| Portion of second payment going towards principal | monthly payment - 12 = P2 |
| Profit and lass statement | gross receipts - operating expenses - total mortgage payment = net profit |
| Project gross income | contract rent + projected rent = projected gross income (PGI) |
| Property value | reproduction cost - depreciation + land value = property value |
| Quarterly interest | annual interest ÷ 4 = quarterly interest |
| Realized gain | sales price - selling costs = realized gain |
| Refinance break-even point | refinancing cost + monthly savings = break even point |
| Solving for acreage | total square footage ÷ 43,560 square foot per acre = acreage |
| Square footage | length x width = square footage (area) |
| Subject property value | comparable property sales + adjustments = subject property value |
| Tax rate | tax requirement ÷ tax base = tax rate |
| Taxable value | assessed value - homestead exemptions = taxable value |
| Total | part ÷ percentage = total |
| Total cost of points | loan points x loan principal = total cost of points |
| Total interest paid | total loan cost - original loan principal = total interest paid |
| Total loan cost | monthly payment x number of payment = total loan cost |
| Triangular lots | 1/2 base x height = square footage (area) |
| VA entitlement | loan amount x 0.25 = guaranty amount |
| Vacancy cost | vacancy percentage (%) x PGI = vacancy cost |
Created by:
karlajulio
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