Question 1

A borrower secured an $80,000 loan at 8.25% interest, and the lender's cash outflow was $77,600. What was the effective yield to the lender?

Accepted Answer

8.63%

$80,000 – 77,600 = $2,400

2,400 ÷ $80,000 = 3 points (0.03)

0.125 × 3 = 0.375

8.25% + 0.375 = 8.63%

Question 2

Which of the following properties would a property manager recommend an investor purchase?

Accepted Answer

A property where the gross monthly rental income was 3% of the purchase price

A property manager would recommend an investor purchase the property where the gross monthly rental income was 3% of the purchase price. The higher the percentage number (i.e

Question 3

A loan officer is paid 45% of the origination fee that her company charges. The loan officer negotiated a reverse mortgage, and her company was paid 2% of the appraised value of $190,000. How much was the loan officer paid?

Accepted Answer

$1,710
$190,000 × 2% (0.02) = $3,800 total origination fee

$3,800 × 45% (0.45) = $1,710

Question 4

A loan officer is paid 45% of the origination fee that her company charges. The loan officer negotiated a reverse mortgage, and her company was paid 2% of the appraised value of $190,000. How much was the loan officer paid?

Accepted Answer

$1,710
$190,000 × 2% (0.02) = $3,800 total origination fee

$3,800 × 45% (0.45) = $1,710

Question 5

How much monthly PITI payment can a purchaser qualify for if he earns $6,600 gross income monthly and the lender applies 28/36 qualifying ratios?

Accepted Answer

$1,848

$6,600 income × 28% (0.28) = $1,848 (monthly PITI payment). The lender's 28/36 qualifying ratios mean that the purchaser's total monthly housing expenses should be no more than 28% of his total monthly gross income, and that the purchaser's tota

Question 6

A 20-unit commercial office building had a vacancy rate of 5%. Monthly rent for each unit was $975. The office building earned additional monthly income totaling $2,000 from on-site amenities like vending machines, storage facilities, and reserved parking

Accepted Answer

$245,100.

Here is the formula for calculating effective gross income: gross potential rent + other income – vacancies/collection losses = effective gross income.

$975 × 20 = $19,500 × 12 = $234,000 potential gross rent

$2,000 × 12 = $24,000 addit

Question 7

A first-time buyer paid $135,500 for her property. Taxes in her community are assessed at 80% of the market value. If the tax rate is 700 mills per $100, how much will be escrowed for taxes for her monthly PITI payment?

Accepted Answer

$63.23
Tax rate = 700 mills ÷ 1,000 = 0.7 ÷ 100 = 0.007

Assessed value $135,500 × 80% (0.80) = $108,400

$108,400 × 0.007 = $758.80 annual taxes

$758.80 ÷ 12 = $63.23 monthly tax

Question 8

A buyer offer of $295,000 was accepted, and a loan was negotiated for 80% at 7% for 25 years. The closing took place on January 5, and the buyer's first PITI payment is due March 1. Using a 365-day year, with the seller having the day of closing, how much

Accepted Answer

$1,176.77
Step 1, determine the loan amount: $295,000 × 0.80 = $236,000. Step 2, determine the interest: $236,000 × 7% (0.07) $16,520. Step 3, determine what the buyer owes. The buyer will owe 26 days for January (31 – 5 = 26 days) and none for February

Question 9

If the interest rate on an FHA-insured mortgage loan is 5.5% and the monthly payment is $1,012, the principal sum would be

Accepted Answer

$220,800.
To find the principal sum, multiply the monthly payment by 12 (12 months in a year) and divide that amount by the interest rate.

$1,012 × 12 = $12,144 (annual payments)

$12,144 ÷ 5.5% (0.055) (interest rate) = $220,800 (the principal amou

Question 10

A commercial lease calls for a minimum rent of $1,200 per month plus additional annual rent of 4% of the year's gross business exceeding $150,000. If the total rent paid at the end of one year was $19,200, how much business did the tenant do during the ye

Accepted Answer

270,000

There are four steps: (1) minimum rental for the year is 12 times the monthly amount: 12 months × $1,200 per month = $14,400, (2) rental above the minimum is found by subtracting the minimum rent from the total rent paid for the year: $19,200 –

Question 11

An owner of income-producing property asked the property manager to prepare a report showing the cash flow of the property. Which of the following accurately shows the formula for calculating a rental property's cash flow?

Accepted Answer

Gross income – (expenses and debt service) = cash flow
The general formula to calculate a rental property's cash flow is gross income – (expenses and debt service) = cash flow. The formula requires that expenses be subtracted from gross income, not net i

Question 12

All of the following lists contain items typically included in the operating expenses of a rental property EXCEPT

Accepted Answer

landscaping, debt service, property taxes.

Debt service is considered an ownership expense, not an operating expense. Debt service is the money required to cover repayment of a loan (principal and interest) for a particular period of time. These other

Question 13

A savings and loan agreed to make a $65,000 mortgage at 8% interest for 30 years and charged three points to negotiate the loan. What was the effective yield to the lender?

Accepted Answer

The lender yield per point is 1.25% (0.125).

0.125 × 3 = 0.375

8% + 0.38 = 8.38%

KAPLAN 9

RE CALCULATIONS

Question	Answer
A borrower secured an $80,000 loan at 8.25% interest, and the lender's cash outflow was $77,600. What was the effective yield to the lender?	8.63% $80,000 – 77,600 = $2,400 2,400 ÷ $80,000 = 3 points (0.03) 0.125 × 3 = 0.375 8.25% + 0.375 = 8.63%
Which of the following properties would a property manager recommend an investor purchase?	A property where the gross monthly rental income was 3% of the purchase price A property manager would recommend an investor purchase the property where the gross monthly rental income was 3% of the purchase price. The higher the percentage number (i.e
A loan officer is paid 45% of the origination fee that her company charges. The loan officer negotiated a reverse mortgage, and her company was paid 2% of the appraised value of $190,000. How much was the loan officer paid?	$1,710 $190,000 × 2% (0.02) = $3,800 total origination fee $3,800 × 45% (0.45) = $1,710
A loan officer is paid 45% of the origination fee that her company charges. The loan officer negotiated a reverse mortgage, and her company was paid 2% of the appraised value of $190,000. How much was the loan officer paid?	$1,710 $190,000 × 2% (0.02) = $3,800 total origination fee $3,800 × 45% (0.45) = $1,710
How much monthly PITI payment can a purchaser qualify for if he earns $6,600 gross income monthly and the lender applies 28/36 qualifying ratios?	$1,848 $6,600 income × 28% (0.28) = $1,848 (monthly PITI payment). The lender's 28/36 qualifying ratios mean that the purchaser's total monthly housing expenses should be no more than 28% of his total monthly gross income, and that the purchaser's tota
A 20-unit commercial office building had a vacancy rate of 5%. Monthly rent for each unit was $975. The office building earned additional monthly income totaling $2,000 from on-site amenities like vending machines, storage facilities, and reserved parking	$245,100. Here is the formula for calculating effective gross income: gross potential rent + other income – vacancies/collection losses = effective gross income. $975 × 20 = $19,500 × 12 = $234,000 potential gross rent $2,000 × 12 = $24,000 addit
A first-time buyer paid $135,500 for her property. Taxes in her community are assessed at 80% of the market value. If the tax rate is 700 mills per $100, how much will be escrowed for taxes for her monthly PITI payment?	$63.23 Tax rate = 700 mills ÷ 1,000 = 0.7 ÷ 100 = 0.007 Assessed value $135,500 × 80% (0.80) = $108,400 $108,400 × 0.007 = $758.80 annual taxes $758.80 ÷ 12 = $63.23 monthly tax
A buyer offer of $295,000 was accepted, and a loan was negotiated for 80% at 7% for 25 years. The closing took place on January 5, and the buyer's first PITI payment is due March 1. Using a 365-day year, with the seller having the day of closing, how much	$1,176.77 Step 1, determine the loan amount: $295,000 × 0.80 = $236,000. Step 2, determine the interest: $236,000 × 7% (0.07) $16,520. Step 3, determine what the buyer owes. The buyer will owe 26 days for January (31 – 5 = 26 days) and none for February
If the interest rate on an FHA-insured mortgage loan is 5.5% and the monthly payment is $1,012, the principal sum would be	$220,800. To find the principal sum, multiply the monthly payment by 12 (12 months in a year) and divide that amount by the interest rate. $1,012 × 12 = $12,144 (annual payments) $12,144 ÷ 5.5% (0.055) (interest rate) = $220,800 (the principal amou
A commercial lease calls for a minimum rent of $1,200 per month plus additional annual rent of 4% of the year's gross business exceeding $150,000. If the total rent paid at the end of one year was $19,200, how much business did the tenant do during the ye	270,000 There are four steps: (1) minimum rental for the year is 12 times the monthly amount: 12 months × $1,200 per month = $14,400, (2) rental above the minimum is found by subtracting the minimum rent from the total rent paid for the year: $19,200 –
An owner of income-producing property asked the property manager to prepare a report showing the cash flow of the property. Which of the following accurately shows the formula for calculating a rental property's cash flow?	Gross income – (expenses and debt service) = cash flow The general formula to calculate a rental property's cash flow is gross income – (expenses and debt service) = cash flow. The formula requires that expenses be subtracted from gross income, not net i
All of the following lists contain items typically included in the operating expenses of a rental property EXCEPT	landscaping, debt service, property taxes. Debt service is considered an ownership expense, not an operating expense. Debt service is the money required to cover repayment of a loan (principal and interest) for a particular period of time. These other
A savings and loan agreed to make a $65,000 mortgage at 8% interest for 30 years and charged three points to negotiate the loan. What was the effective yield to the lender?	The lender yield per point is 1.25% (0.125). 0.125 × 3 = 0.375 8% + 0.38 = 8.38%

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