Real Estate Math Practice Exam

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• A parcel of land that is 5 miles on each side would be described as
• A specific parcel of real estate has a market value of $180,000 and is assessed for tax purposes at 35 percent of market value. The tax rate for the county in which the property is located is 30 mills. The annual tax bill will be?
• In a cost problem, once you have added the percent that the price has increased to 100%, you convert
• What DSCR threshold do lenders commonly require for commercial loans?
• Given PGI = 150,000, Vacancy Rate = 5%, and Other Income = 10,000, what is EGI?
• Which statement best describes the purpose of reserves for replacement in real estate finance?
• If the assessed value is $89,250 and the equalization factor is 1.25, what is the adjusted assessed value?
• In a sale where the buyer pays $50,000 cash and the balance with a mortgage on a sale price of $89,500, what is the loan-to-value ratio?
• A man borrowed $85,000, to be repaid in monthly installments of $823.76 at 11.5 percent annual interest. How much of his first month's payment was applied to reducing the principal amount of the loan?
• CapEx in NOI analysis?
• Which statement best describes the role of risk in investment value?
• In a cost problem, the last step is to divide
• A building was purchased for 85,000 with 10 percent down and a loan for the balance. If the lender charged two discount points, how much cash did the buyer need to come up with at closing if the buyer incurred no other costs?
• Which unit is used to describe 43,560 square feet?
• A 100-acre tract is divided into 140 residential lots. The streets take up 1/8 of the total tract. How many square feet are in each lot?
• Which formula represents the standard fixed-rate mortgage monthly payment (P&I) given the loan amount, monthly rate, and total payments?
• If the broker received a 6.5 percent commission that was $10,400, what was the sales price of the house?
• If a property sells for $250,000 and the broker's commission rate is 6 percent, what is the total commission?
• What is the rate of commission (R)?
• If a square parcel has an area of 16 square miles, the length of each side is
• Current market value is $255,000; assessed at 35% of market value with an equalization factor of 1.25. If the tax rate is $3.50 per $100 of assessed value, what is the amount of real estate tax due?
• What is Gross Potential Rent (GPR) vs. Effective Gross Income (EGI)?
• If hold period cash flows are 15,000; net sale proceeds 30,000; initial investment 20,000, what is the ROI?
• What does leverage mean in real estate investing?
• How do you account for vacancies and credit losses in a pro forma?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $54,000 and the decimal from step 2 is 0.90, what is the final price?
• In the formula Value = Income / Rate, what does "Rate" represent?
• Which statement defines holding period return?
• What is a lease escalator?
• There is a tract of land that is 1.25 acres and the lot is 150 feet deep. At $65 per front foot, what is the selling price of the lot?
• What does the rate of return (R) represent?
• A buyer purchased 4.5 acres of land for $78,400. An adjoining owner wants to purchase a strip of this land measuring 150 feet by 100 feet. What should this strip cost the adjoining owner if it sells for the same price per square foot the buyer originally paid for it?
• What does GPR stand for in real estate metrics?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $68,000 and the decimal from step 2 is 0.68, what is the final price?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $99,000 and the decimal from step 2 is 0.99, what is the final price?
• What is the acreage of the NE quarter of the NW quarter of a standard section?
• What is the area in acres of the NW1/4 of the SE1/4 of Section 10 in a standard government survey?
• In a gross lease, who typically pays most of the operating expenses?
• The area of a square is
• In a double-net lease (NN), which costs does the tenant typically pay?
• A house sells for $89,500; the buyer pays $50,000 in cash and gives the seller a mortgage for the balance. If the state transfer tax is 1% of the sale price, how much tax is due?
• Convert 140 feet 9 inches to decimal feet.
• To solve a commission problem, which expression represents the calculation of the commission?
• What is the amount invested (A)?
• A real estate broker, on a sale, earns a 6.5 percent commission. The listing salesperson receives 30 percent of the commission, which equals $3,575. What was the selling price of the property?
• Three discount points on a $120,000 loan equate to an actual loan amount received by the borrower. What is that amount?
• Which statement best describes the profit in an investment?
• In a capitalization (value) problem, which formula determines the value of a property?
• In the income approach, what is NOI used for?
• A commission (C) is
• Cap rate is commonly computed as which formula?
• Which formula correctly computes Effective Gross Income (EGI)?
• Investment value differences across investors?
• In vacancy calculations, which statement is correct?
• Which statement about reserves for replacement is true?
• Cap rate compression is characterized by which of the following effects on property value for a given NOI?
• What is the commission amount on a sale price of 310,000 at 7 percent?
• Which statement correctly distinguishes market vs investment value?
• Cash-on-Cash Return formula equals?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $120,000 and the decimal from step 2 is 0.80, what is the final price?
• A property owner wants to net at least $47,300 after paying a 5% broker's commission and paying $1,150 in closing costs. At what price must it sell?
• Given a Purchase Price of 800,000 and Gross Annual Rent of 100,000, what is the Gross Rent Multiplier (GRM)?
• The net operating income is requested when the property is appraised for $420,000 and the capitalization rate is 6%. What is the NOI?
• If NOI = 120,000 and Cap rate = 6%, what is the property value?
• Which statement is true about market value relative to investment value?
• What is the income (I) in this context?
• Which statement best describes how to calculate the commission?
• A buyer obtains a loan for 90% of a $190,000 house. If they have already paid $3,800 in earnest money, how much additional cash must they provide for the down payment?
• What is Interest (I) in loan terms?
• DSCR is defined as what ratio?
• Convert 75 feet 6 inches to decimal feet.
• If an investor uses a higher discount rate for investment value, what happens?
• Using a tiered commission where the total broker's commission on a $234,500 sale is 6.5%, and the salesperson receives 30% of the first $2,500, 15% of the amount between $2,500 and $7,500, and 5% of the remainder, what is the salesperson's total compensation?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $92,000 and the decimal from step 2 is 0.92, what is the final price?
• What fraction of a section is represented by SE 1/4 of SE 1/4 of SE 1/4?
• A warehouse is 80 feet wide, 120 feet long, and has ceilings 14 feet high. If 1,200 square feet of floor space is partitioned off for an office from floor to ceiling, how many cubic feet of space remain in the warehouse?
• How is price per square foot calculated?
• Market value and investment value same when?
• Which statement most accurately describes market value?
• If the gross multiplier is 6 and the gross income is $40,000, what is the property value using the GRM method?
• If Operating Expenses are $60,000 and Effective Gross Income is $350,000, what is the Operating Expense Ratio?
• If a rural property contains 80 acres and is sold for $2,000 per acre, what is the total sales price?
• Break-even Occupancy is the occupancy level needed to cover fixed operating expenses and debt service. Which formula expresses Break-even Occupancy?
• Which term represents the market value of the income-producing property?
• If an investment requires $150,000 and annual cash flows are $30,000, what is the Payback Period?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $110,000 and the decimal from step 2 is 0.88, what is the final price?
• The seller received a closing check of 121,600 after paying a 7 percent commission, 31,000 in other closing costs, and a 135,700 loan payoff. What was the total sales price?
• Depreciation for residential rental property is typically calculated using which method?
• Which statement best defines Potential Gross Income (PGI)?
• Balance (B) is
• What is the remaining acres after removing street area from a 100-acre tract if streets take 1/8?
• Which expense is excluded from NOI?
• What is the decimal form of 8%?
• A square parcel with side length 5 miles has an area of
• A parcel of land is 10 acres. How many 50 foot by 100 foot lots could be subdivided from the property if 26,000 square feet were dedicated for roads?
• In a price problem, after you have subtracted the percentage from 100%, you
• To solve an investment problem, which expression correctly represents the formula described?
• LTV ratio is computed as?
• If Annual Net Income is $60,000 and Capitalization Rate is 6% (0.06), what is the estimated Value?
• On a building purchased for 85,000 with 10% down, what is the down payment?
• Annual real estate taxes are 4,745. The seller pays taxes in arrears for the preceding calendar year. If closing occurs on July 15, what is the prorated tax amount the buyer owes at closing?
• A 2.92 acre tract contains how many square feet?
• In what scenario would market value and investment value diverge most?
• In a cost problem (CAPS), you first add
• Which item would be considered Other Income in EGI calculations?
• How many acres are contained in the N1/2 of the SW1/4 of a section?
• A first-time buyer has a gross monthly income of $3,000. According to Fannie Mae's standard qualifying ratios, what is the total housing expense (principal, interest, taxes, and insurance) he can bear?
• What is the total acreage of SW1/4 plus SE1/4 of a section?
• What is the value (V) in this context?
• Salesperson A earns on a sale of $129,985 with an 8 percent commission. Brokers B (60%) and D (40%) split the commission. If broker B keeps 30 percent of what she received and pays the remainder to Salesperson A, how much does Salesperson A earn on this sale?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $150,000 and the decimal from step 2 is 0.75, what is the final price?
• The effective gross annual income from a property is 112,000. Total expenses for this year are 53,700. What capitalization rate was used to obtain a valuation of 542,325?
• A parcel of land is 400 ft by 640 ft. the parcel is cut in half diagonally by a stream. How many acres are there in each half of the parcel?
• If a land parcel is described as a mile square, its side length is
• What is depreciation recapture?
• Under a 100 percent commission plan, a salesperson has two sales in a month: $89,500 at 6% and $125,000 at 5.5%. Monthly desk rent is $900 and other expenses are $1,265. How much income does the salesperson keep for the month?
• Which measure is affected by vacancies and credit losses?
• A property with market value $35,000 is assessed at 40% of market value. The tax rate is $4 per $100 of assessed value. What is the tax due?
• If a 64-acre tract is sold for $2.50 per square foot, what is the total price?
• Which statement best describes leverage in relation to risk and return?
• What is the primary purpose of a 1031 exchange?
• PITI includes which components?
• How is depreciation for a residential rental property typically calculated?
• What is the total commission earned on a sale of $225,000 at a 6% commission rate?
• What is the primary purpose of an escrow impound account?
• What percentage of total land area is dedicated for roads if 26,000 square feet are set aside from a 435,600 square feet parcel?
• A one-acre parcel is sold at $2.50 per square foot. What is the total selling price?
• If NOI is $50,000 and property value is $500,000, what is the cap rate?
• How is the Equity Multiplier calculated?
• If the NOI remains unchanged and the cap rate falls, what happens to the property value?
• Which statement best distinguishes between the interest rate and APR?
• A home is valued at $95,000. Property in its area is assessed at 35 percent of its value, and the local tax rate is $2.85 per $100. What is the amount of annual tax paid on the home?
• Rate of interest (R) is
• What is the difference between a gross lease and a net lease?
• What is the loan amount on the 85,000 building after the 10% down payment?
• If the loan balance is 76,500 and discount points are 2 percent, what is the cost of the discount points?
• Which statement correctly describes PGI and EGI relationship?
• What is the purpose of an escrow account in mortgage transactions?
• Operating Expense Ratio is defined as which ratio?
• What is the total price of 80 acres at $1,500 per acre?
• A buyer purchasing a 100,000 home has paid 12,000 as earnest money and has a loan commitment of 70 percent of the purchase price. How much additional cash must be brought to closing if there are no other closing costs?
• What does 'effective age' represent in appraisal?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $168,000 and the decimal from step 2 is 0.84, what is the final price?
• A parcel of land can also be described by
• What was the price per front foot for a 100' x 125' lot that sold for $125,000?
• Which statement about investment value is true?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $96,000 and the decimal from step 2 is 0.80, what is the final price?
• What is an interest-only period?
• Which item is least likely to affect market value?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $50,000 and the decimal from step 2 is 0.50, what is the final price?
• What is the rate of capitalization (R)?
• A property listed with MLS sells for $53,500. The total commission is 6 percent of the sales price. The selling broker receives 60 percent of the commission, and the listing broker receives the balance. What is the listing broker's commission?
• A farmer will pay $1,200 per acre for the SE 1/4 of the SE 1/4 of the SE 1/4 of Section 2. Section 2 contains 640 acres. What is the total price to pay for the land?
• In a 1031 exchange, the property exchanged must be which of the following?
• Which statement best describes what GRM measures?
• Compute the equity multiplier given Total Assets of 1,000,000 and Total Equity of 500,000.
• If a property's annual net income is 24,000 and it is valued at 300,000, what is its capitalization rate?
• Which item is excluded from operating expenses?
• For a price problem, you first subtract
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $75,000 and the decimal from step 2 is 0.75, what is the final price?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $108,000 and the decimal from step 2 is 0.90, what is the final price?
• Which statement correctly contrasts market value with investment value?
• In a 100-acre tract, the streets require 1/8 of the total land. How many acres are allocated to streets?
• Which statement about debt service is accurate?
• How many rods are in half a mile?
• If a loan amount is $420,000 and the appraised value is $600,000, what is the LTV ratio?
• A lot has a frontage of 75 feet 6 inches and a depth of 140 feet 9 inches. What is the approximate total square feet of the lot?
• A borrower obtains a $100,000 mortgage loan for 30 years at 7.5 percent interest. If the monthly payments of $699 are credited first to interest and then to principal, what will be the balance of the principal after the borrower makes the first payment?
• When modeling ROI, which components are used to estimate the return on sale?
• What is the annual real estate tax on a property that is valued at $135,000 and assessed for tax purposes at $47,250 with an equalization factor of 125 percent, when the tax rate is 25 mills?
• 1 acre is equal to
• What is the total area in square feet of a rectangular parcel measuring 400 ft by 640 ft?
• Which item is an operating expense?
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $84,000 and the decimal from step 2 is 0.70, what is the final price?
• Which statement best defines holding period return?
• Which is NOT a driver of market value?
• A commercial lease calls for a minimum rate of 1,200 per month plus 4 percent of the annual 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 year?
• The net operating income of the downtown office building is $34,786 per year. If the capitalization rate is 7%, what is the appraised value?
• 1 rod is equal to
• In a price problem, the last step is to divide the net to be received by the decimal found in step 2. If the net to be received is $45,000 and the decimal from step 2 is 0.75, what is the final price?
• A homeowner incurs the following expenses: (1)$9,500 in interest on a mortgage loan on his residence; (2) $800 in real estate taxes plus a $450 late payment penalty; and (3)a $1,000 loan origination fee paid in the course of purchasing his home. How much may be deducted from his gross income?
• What is the approximate monthly P&I payment on a $350,000 loan at 4.75% for 30 years?
• What is the profit (P) in investment terms?
• Which statement best defines Net Operating Income (NOI)?
• Which statement defines Payback Period?
• To determine the rate of return given profit and amount invested, which formula would you use?
• Before applying the capitalization formula, what must you determine?
• How do you calculate Cash Flow Before Tax?
• Which statement best describes IRR vs Cap Rate?
• If a lender agrees to make a loan based on an 80 percent LTV, what is the amount of the loan if the property appraises for 114,500 and the sales price is 116,900?
• CAM charges are best described as:
• If net operating income is 58,300 and the capitalization rate used is 8 percent, what is the estimated value?
• To solve a loan problem, you would use the formula for interest:
• Which lease type typically passes most operating expenses to the tenant?
• A vacant land parcel was sold for $200 per front foot. If the broker earns a 10% commission and the salesperson has a 60% share of that commission, how much does she receive?
• 1 mile is equal to
• GRM is calculated as?
• If a property sells for $500,000 and the rate of commission is 6%, what is the commission?
• What is the total sale price of a vacant parcel described as 80 feet wide by 200 feet deep selling for $200 per front foot?
• What is a limitation of the Gross Rent Multiplier (GRM) as a valuation metric?
• With a potential gross rental income of $20,000, vacancy rate of 5%, and additional income from laundry and storage of $700, what is the effective gross income?
• Which statement best describes why investment value may differ between investors?
• If a borrower must pay one point for a $90,000 loan, how much money must he or she pay?
• How is the monthly mortgage rate derived from the annual rate?
• The area of a square with lengths of 4 miles on each side would be
• Which statement best defines market value for real estate?
• Which statement correctly contrasts a fixed-rate mortgage with an adjustable-rate mortgage (ARM)?
• How are leasehold improvements accounted for in financial statements?
• Which factor would likely affect investment value but not market value?
• In real estate terminology, what does the sales price (P) represent?
• A driveway is 15 feet wide by 40 feet long with a thickness of 4 inches. If concrete costs $60 per cubic yard and labor costs $1.25 per square foot, what is the total cost?
• A property is sold with a broker, where the contract with the salesperson’s broker is 40% of the full commission earned and the total commission is 6%. What is the salesperson's share of the commission?
• Two brokers split a 6% commission equally on a $146,000 home. The selling salesperson, Joe, was paid 70 percent of his broker's share. The listing salesperson, Janice, was paid 30 percent of her broker's share. How much did Janice receive?
• How many acres are contained in 1/64 of a section?
• Cap Rate is calculated as?
• A listing agreement states a 7 percent commission. A home sells for $130,000. What is the seller's net after the commission is paid?
• What is the assessed value before applying the equalization factor, given a market value of $255,000 and an assessment rate of 35%?
• Which statement about the equity multiplier is true?
• How do you prorate property taxes at closing when ownership begins mid-year?
• The selling price of a fourplex was 240,000. The building is five years old and has an estimated useful life of 60 years. What is the property's total depreciation to date?
• If the equalization factor on a property with assessed value 47,250 changes from 125% to 150% and the tax rate is 25 mills, what is the new tax?
• In a net lease, which costs are typically paid by the tenant in addition to base rent?