calculating loan to value

1 2 Real Estate Principles of Georgia Solving Math Problems Four steps 3 Solving Math Problems Using formulas 4 Solving Math Problems Using formulas 5 Solving Math Problems Using formulas 6 Decimal Numbers Converting fraction to decimal 7 Decimal Numbers Converting decimal to percentage 8 Decimal Numbers Converting percentage to decimal 9 Summary Solving Math Problems Read problem Write formula and isolate the unknown Substitute Calculate 10 Area Problems Formula: A = L × W 11 12 Area Problems Area Problems Example 13 Area Problems Square yards 14 Area Problems Miles / Acres 1 mile = 5,280 feet 1 15 1 acre = 43,560 square feet Area Problems Triangle formula: A = ½ B × H 16 17 Area of a Triangle Triangles Example 18 Triangles Example, continued 19 Triangles Example, continued 20 Triangles Example, continued 21 Area Problems Odd shapes To find the area of an irregular shape: 1. Divide the figure up into squares, rectangles, and right triangles. 2. Find the area of each of the shapes that make up the figure. 3. Add the areas together. 22 Odd Shapes Example 23 Odd Shapes Example, continued 24 Odd Shapes Example, continued 25 Odd Shapes Example, continued 26 Odd Shapes Avoid counting same section twice 27 Odd Shapes Avoid counting same section twice 28 Odd Shapes Avoid counting same section twice 29 Odd Shapes Avoid counting same section twice 2 30 Odd Shapes Avoid counting same section twice 31 Odd Shapes Avoid counting same section twice 32 Odd Shapes Narrative problems 33 Odd Shapes Example 34 Odd Shapes Example 35 Odd Shapes Example, continued 36 Odd Shapes Example, continued 37 Odd Shapes Example, continued 38 Odd Shapes Example, continued 39 40 Volume Problems Volume Problems Formula: V = L × W × H 41 Volume Problems Cubic yards 42 Volume Problems Example 43 Summary Area and Volume Area of a square or rectangle: A = L × W Area of a right triangle: A = ½ B × H Divide odd shapes into squares, rectangles, and triangles Volume: V = L × W × H Square feet, square yards, cubic feet, cubic yards, miles, acres 44 45 Percentage Problems Percentage Problems 3 Working with percentages 46 Percentage Problems Example 47 Percentage Problems Formula: W × % = P 48 Percentage Problems Formula: W × % = P 49 Percentage Problems Interest and profit problems 50 Percentage Problems Interest and profit problems 51 Percentage Problems Isolating the unknown 52 Percentage Problems Finding the percentage or rate 53 Percentage Problems Finding the whole 54 Percentage Problems Multiply or divide? 55 Multiply or Divide? Finding the percentage or rate 56 Multiply or Divide? Finding the percentage or rate 57 Multiply or Divide? Finding the whole 58 Multiply or Divide? Finding the whole 59 Multiply or Divide? Finding the part 60 Multiply or Divide? Finding the part 61 Summary Percentage Problems Percentage formula: Whole × Percentage (Rate) = Part W×%=P P÷W=% 4 P÷%=W Types of percentage problems: commission problems, interest problems, and profit problems. 62 Loan Problems Interest 63 Loan Problems Semiannual interest 64 Loan Problems Semiannual interest 65 Loan Problems Quarterly interest 66 Loan Problems Quarterly interest 67 Loan Problems Monthly interest 68 Loan Problems Monthly interest 69 Loan Problems Amortization 70 Loan Problems Amortization 71 Loan Problems Amortization 72 Loan Problems Amortization 73 Loan Problems Amortization 74 Loan Problems Amortization 75 Loan Problems Amortization 76 Loan Problems Amortization 77 Loan Problems Amortization 78 Summary 5 Loan Problems Use the percentage formula for loan problems. Whole × Percentage (Rate) = Part Convert semiannual, quarterly, or monthly interest into annual interest before substituting numbers into formula. Amortization problems ask you to find a loan’s principal balance. 79 80 Profit or Loss Problems Profit or Loss Problems “Then” and “Now” formula 81 Profit or Loss Problems Calculating a loss 82 Profit or Loss Problems Calculating a loss 83 Profit or Loss Problems Calculating a loss 84 Profit or Loss Problems Calculating a loss 85 Profit or Loss Problems Calculating a gain 86 Profit or Loss Problems Calculating a gain 87 Profit or Loss Problems Calculating a gain 88 Profit or Loss Problems Appreciation and depreciation 89 Profit or Loss Problems Compound depreciation 90 Profit or Loss Problems Compound depreciation 91 Profit or Loss Problems Compound depreciation 92 Profit or Loss Problems Compound depreciation 93 Profit or Loss Problems Compound appreciation 6 94 Profit or Loss Problems Compound appreciation 95 Profit or Loss Problems Compound appreciation 96 Summary Profit or Loss Problems Then × Percentage = Now To find the percentage received: If there’s been a loss in value, subtract the rate of change from 100%. If there’s been a gain (a profit), add the rate of change to 100%. Compound appreciation and depreciation: repeat the profit or loss calculation as needed. 97 98 Capitalization Problems Capitalization Problems Formula: V × % = I 99 Capitalization Problems Capitalization rate 100 Capitalization Problems Calculating value 101 Capitalization Problems Calculating value 102 Capitalization Problems Calculating value 103 Capitalization Problems Calculating value 104 Capitalization Problems Finding the cap rate 105 Capitalization Problems Finding the cap rate 106 Capitalization Problems Changing the cap rate 107 Capitalization Problems Changing the cap rate 108 Capitalization Problems Changing the cap rate 7 109 Capitalization Problems Changing the cap rate 110 Capitalization Problems Changing the cap rate 111 Capitalization Problems Calculating net income 112 Capitalization Problems Calculating net income 113 Capitalization Problems Calculating net income 114 Capitalization Problems Calculating net income 115 Capitalization Problems Calculating net income 116 Capitalization Problems Calculating net income: OER 117 Capitalization Problems Calculating net income: OER 118 Capitalization Problems Calculating net income: OER 119 Summary Capitalization Problems Value × Capitalization Rate = Net Income Capitalization rate: the rate of return an investor would want from the property. The higher the cap rate, the lower the value. Subtract operating expenses from gross income to determine net income. OER: Operating expense ratio 120 121 Tax Assessment Problems Tax Assessment Problems Assessment ratio 122 Tax Assessment Problems Assessment ratio 123 Tax Assessment Problems Assessment ratio 124 Tax Assessment Problems 8 Tax rate per $100 or $1,000 125 Tax Assessment Problems Tax rate per $100 126 Tax Assessment Problems Tax rate per $100 127 Tax Assessment Problems Tax rate per $1,000 128 Tax Assessment Problems Tax rate per $1,000 129 Tax Assessment Problems Tax rate in mills 130 Tax Assessment Problems Tax rate in mills 131 Tax Assessment Problems Tax rate in mills 132 Summary Tax Assessment Problems Assessed Value × Tax Rate = Tax To find assessed value, you may have to multiply market value by the assessment ratio. Tax rate may be given as a percentage, as a dollar amount per $100 or $1,000 of value, or in mills. Multiply mills by .001 to get a percentage rate. 133 134 Seller’s Net Problems Seller’s Net Problems Basic version 135 Seller’s Net Problems Basic version 136 Seller’s Net Problems Basic version 137 Seller’s Net Problems Variations 138 Seller’s Net Problems Variation 1 139 Seller’s Net Problems Variation 1 9 140 Seller’s Net Problems Variation 1 141 Seller’s Net Problems Variation 2 142 Seller’s Net Problems Variation 2 143 Seller’s Net Problems Variation 2 144 Summary Seller’s Net Problems 1. Desired Net + Costs of Sale + Loan Payoff 2. Subtract commission rate from 100% 3. Divide Step 1 total by Step 2 rate. Result is how much property must sell for. 145 146 Proration Problems Proration Problems Closing date is proration date 147 Proration Problems In advance or In arrears 148 Proration Problems 365 days or 360 days 149 Proration Problems 3 Steps 150 Proration Problems Property taxes 151 Proration Problems Property taxes 152 Proration Problems Property taxes 153 Proration Problems Insurance 154 Proration Problems Insurance 155 Proration Problems Mortgage interest 156 Proration Problems Mortgage interest 10 157 Prorating Mortgage Interest Seller’s final interest payment 158 Prorating Mortgage Interest Seller’s final interest payment 159 Prorating Mortgage Interest Buyer’s prepaid interest 160 Prorating Mortgage Interest Buyer’s prepaid interest 161 Prorating Mortgage Interest Buyer’s prepaid interest 162 Summary Proration Problems 1. Calculate per diem rate. (360-day year for mortgage interest or 365-day year for everything else.) 2. Count number of days. 3. Multiply per diem rate by number of days. 11