What Are the Most Frequently Used Real Estate Math Formulas?
It is equally important that you learn your definitions and understand the most frequently used real estate math formulas. As with any topic of study, the more you practice, the easier it will become. Here are some examples of the most frequently used real estate math formulas;
Commission = (house selling price) x (commission percentage)
Gross Rent Multiplier Formulas
Gross Rent Multiplier = (property price) / (gross rental income)
Annual Gross Rental Income = (monthly rental income) x (12)
Property Tax Formulas
Property Tax Rate = (assessed value) x (mill rate)
Assessed Value = (assessment rate) x (market value)
1 mill = equal to 1/1,000th of a dollar or $1 in property tax.
Converting Measurements Formulas
1 Acre = 43560 square feet
Area (ft2) = (length ft) x (width ft)
Perimeter = (side) + (side) + (side) + (side)
28/36 Rule or “The Mortgage Rule of Thumb.” Formula
Housing costs to qualify for the majority of mortgage loans= (gross monthly or annual income) x (.28 or .36)
Discount Points Formulas
Discount Points = Prepaid Interest
Break Even Point = (points cost) / (monthly payment savings)
Simple Interest Formula
Interest = (principal amount) x (rate of interest) (time)
Real estate math does not need to be difficult. There are only a few concepts that you need to master, and the more time you dedicate to study and practice real estate math problems and concepts, the easier you will find your broker license exam and the more success you will have throughout your career.