Real Estate Formula

Maximum money you should borrow:

Formula: Your annual income x 3.5

E.g.: $50,000 (annual income) x 3.5 = $175,000

Equalization Rate

Market Value / Assessed Value

Assessed Value: The value of the property as determined by the local tax assessor for tax purposes.
Market Value: The estimated fair market value of the property, typically based on recent sales of comparable properties in the area.

Capitalization Rate - The ratio between the net income from a real estate investment and the value of the investment expressed as a percentage

Annual Net Income / Value

Annual Net Income

Value x Capitalization

Rate of Return (in %)

(Ending Value - Beginning Value + Income Earned / Beginning Value) x 100

Total Commission (for agent)

Sales Price x Commission Rate

Word Problem: A seller advises a broker that she expects to net $80,000 for the sale of her property after the broker commission of 7% is deducted from the proceeds of the sale. For what price must the property be sold?

$86,022

1 Acre

43,560 Ft^2

Area of Triangle

1/2bh

Area of a rectangle

lw

Area of a trapezoid

A=1/2(b1+b2)h

Annual Debt Service

Monthly debt service x 12 months