Real Estate Investing Math Applications
Firstly, if your name is Jon, JScott, Will, Bill or some other name I forgot but you know I'm talking to you. You're NOT allowed to answer the questions but ONLY allowed to correct and inform. Again, you're NOT allowed to give the answer but simply help if they're doing the formula wrong. Correct and inform on the formula but do NOT give the answer :mrgreen:
Here are some math questions that you might find interesting. They're not 'hard' by any means, you just have to make sure you understand the process of the math to get to the right answer.
What I'd like to do is see not only your answer but how you arrived to that answer. Hopefully, this will help you learn/master the process and help those that are still learning.
1: The property tax rate in Nick's area is $9.82 per $100 of assessed value. The assessed value is $9,290. What are Nick's taxes?
2: Nick's property has a market value of $80,000 and is to be insured at 85% of value. The insurance rate is $0.98 per $100 of insurance value for a 3-year period. What is the annual premium?
3: Nick has a home with an assessed value of $39,350. The tax is $12.20 per $100 of assessed value. What are Nick's taxes?
4: The county assesor says the full cash value of a 12,000 sq ft strip center you have listed is $825,000. Annual income is $12/sq. ft/year, minus a 14% vacancy rate and a 3% credit loss. Owner's expenses are: $23,000 property tax and $12,000/year insurance. What is the Cap Rate?
Lastly: My sister owns an apartment complex which rents as follows: 3 - 1br @ $350/mo; 15 - 2br @ $440/mo; 3 - 2br @$495/mo. You determine a 10% vacancy rate and 3% credit losses/year. The annual property tax is $7,300; the insurance is $2,100. She takes $6,500/year depreciation. An investment broker suggest 10.25% Cap Rate. What is your estimate of Value?
You don't have to do all of them if you don't want to. These are questions that I'll be getting tested on when I take my RE licensing exam. I already knew/know the answers but I wanted to give others an example to learn from.
Good luck, don't be scared to be wrong, be scared to NOT try