Stop Memorizing Real Estate Math Formulas For Exam | 25 Practice Math Questions, 1 Formula (T-Chart)

are you literally losing your mind with all the crazy math formulas that you need to know just to pass the real estate exam if so listen up in this video I'm going to share a little known method that will have you solving real estate math problems faster than you could say commission percentage I'm also going to walk you through 25 sample real estate math questions and show you how this one little math hack makes solving these questions a breeze [Music] all right so enough with the gatekeeping I am about to unveil the secret it's called the team method and it's about to become your new best friend no more pulling your hair out trying to remember formulas like a mad scientist no more late nights trying to cram formulas that look like algebraic hieroglyphics just set it up plug in what you know and Presto you've got your answer without all that formula frustration so grab a pencil and a calculator and let's get ready to learn the easy way to real estate math mastery [Music] all right let's get into this so we can get back to studying so we can pass that exam the T method is so simple yet so powerful here's how it works in Just Three Easy Steps step one label the chart what you're gonna do is draw a T and then label the top as part this section is where you will put the part or a portion of the total amount for example this can be a commission amount or a net operating income down payment amount and so on now we're going to label the left column with your total amount which is usually sales price or market value amounts you can also include commissions here but only when there's a broker split because that commission would be considered a total amount but let's not get ahead of ourselves here I'll explain that a little further into the video here's the last part of this step we're going to label the right column with your rate amount or percent amount make sure to convert all percentages into decimal form by dividing by 100 first here's an example three percent equals three over one hundred which then equals 0.03 step two insert the signs now you're going to insert a division sign here and here on a multiplication sign here between the left and right columns don't forget to also add the times 100 on this column so you don't forget to multiply by a hundred after dividing if you have to use this side of the chart okay so how this chart works is that if you get a part and a total you're going to divide then multiply by a hundred and get a percent or rate now if you get a part and a rate you're also going to divide but remember to divide that percentage by a hundred first and when you divide those two figures you'll get the total amount and the last part is if you get a total amount and a rate first you'll divide the percent or rate by a hundred then multiply those two figures and end up with the part or portion of the total amount step three just plug in your numbers and get those answers it's that easy no crazy formulas to memorize just set up this little chart and use what you're given to find what you need now let me show you this magical method in action using 25 different sample real estate math questions let's start with an easy one here we go number one a property is appraised at five hundred fifty thousand dollars with a loan to value ratio of eighty percent what is the loan amount first thing we're going to do is take out the t-chart then we see that the property has an appraised value of five hundred fifty thousand dollars since that is considered a total amount I'm going to put that in the total column I also see that it has a loan to value ratio of eighty percent since that's a percent I'm going to put that in my rate column so convert 80 to a decimal I say 80 divided by 100 is going to equal 0.8 now all we have to do is multiply so 550 000 times 0.8 equals four hundred forty thousand dollars so the loan amount for this example is four hundred forty thousand dollars So my answer is B number two a property's annual taxes are four thousand eight hundred dollars with a tax rate of one point two percent what is the assessed property value so the first step since we have a percent we're going to take out the T chart we also see that the properties annual taxes are four thousand eight hundred dollars and a tax rate of 1.2 percent so I'm going to put the Forty eight hundred dollars of the annual taxes as the part amount since they want to know what is the assessed property value that would be considered the total amount and the 1.2 percent would go in the rate column I would then convert 1.2 to a decimal divided by a hundred so that equals 0.012 so now we see that we have to divide so four thousand eight hundred dollars divided by 0.012 is going to equal an assessed property value of four hundred thousand so the answer to this one is C number three a property has a value of two hundred forty thousand dollars and a net operating income of thirty thousand dollars what is the rate of capitalization since they're asking for rate and all of our answers half percents we know we can bring the T chart so let's take out the T chart and we see that the value of the property is two hundred forty thousand dollars that is the total amount and the net operating income is just the portion so we're gonna say that's on top now we know to divide so thirty thousand dollars divided by two hundred forty thousand dollars equals zero point one two five now remember to multiply by 100 to convert that to a percent so 0.125 times 100 equals twelve point five percent so the answer is a number four broker Max agrees to pay sales associate Sally 60 of all sales commissions she generates from the office if Sally sells a property for seventy two thousand dollars at a seven percent brokerage commission what is her share of the commission so we take out the t-chart we see that Sally sold the property for seventy two thousand dollars at a seven percent brokerage commission so the seventy two thousand dollars is our sales price so that goes in the total column and the seven percent brokerage commission would go in our rate column don't forget to convert it to a decimal by dividing by 100 so seven percent is going to equal 0.07 now we know we have to multiply so seventy two thousand dollars times 0.07 equals five thousand forty dollars now we have to pay sales associate Sally sixty percent of that so we're going to take the five thousand forty dollars put that in the total amount remember this is what I told you about putting the broker split in total amount then we're going to multiply by the 60 Sally's share then convert it into a decimal by dividing by 100 so that equals 0.6 so now we're just going to multiply five thousand forty dollars times 0.6 equals three thousand twenty four dollars so the answer to this one is C number five Sandy is purchasing a home for five hundred seventy thousand dollars with a down payment of one hundred fourteen thousand dollars if she finances the difference what is the loan to value ratio so we're going to bring out the T chart and then we see that the home purchase or sales price is five hundred seventy thousand dollars so five hundred seventy thousand dollars will go in the total column now we see she had a down payment of a hundred fourteen thousand dollars but we have to find out what the loan amount is here first so five hundred seventy thousand dollars minus one hundred fourteen thousand dollars equals 456 000 now that we have the loan amount that can go in the parts section so now all we have to do is divide so 456 000 divided by five hundred seventy thousand dollars equals 0.8 and then remember to multiply by 100 so 0.8 times 100 equals eighty percent so the answer is B number six a buyer purchased a property for sixty five thousand dollars a lending institution loaned the buyer eighty percent of the purchase price and charged a discount of Four Points what is the amount of the discount paid all right so let's take out the T chart we see that the buyer purchased the property for sixty five thousand dollars and they're giving her eighty percent of that for a loan so we got to find out how much the loan is first because discount points are always applied to the loan so when we put sixty five thousand dollars in the total column and eighty percent in the rate column don't forget to divide by a hundred to convert your percent to a decimal so eighty percent is going to equal 0.8 so now all we have to do is multiply 65 000 times 0.8 is going to equal fifty two thousand dollars so now that we have our loan amount we can put it in our total column okay so when so now we see that we have four points here remember one point equals one percent so four points is going to equal four percent so we're going to put that four percent in the rate column convert it to a decimal so four percent equals 0.04 and then we're just going to multiply again so fifty two thousand dollars times 0.04 equals two thousand eighty dollars so the answer to this one is C number seven an apartment building consists of 430 units the complex is ninety percent occupied how many units are vacant so let's take out the T chart and we see that there's a total amount of units of 430. so we're going to put that in the total column and then we see that the complex is 90 occupied so we put 90 in the rate column convert it to a decimal by dividing by 100 so that's going to equal 0.9 and now we multiply so 430 times 0.9 equals 387. that's how many units are occupied right so the 387 units are occupied now we got to find how many are vacant so what we could do is simply subtract so 430 of the total units minus the ones that are already occupied is going to give us 43 units that are vacant so the answer to this one is C number eight if the closing costs total eight thousand dollars which was four percent of the purchase price how much was the total sales price all right let's take out the t-chart we're going to put our four percent in our rate column convert it to a decimal by dividing by a hundred so that's going to equal 0.04 now closing costs are just a portion of an amount so that will go on the top part in part so 8 000 on top which means we're going to have to divide so eight thousand dollars divided by 0.04 is going to equal two hundred thousand dollars so the answer to this one is a number nine Gabe's home has an assessed value of a hundred seventy two thousand dollars and his tax rate is 0.55 percent what are the annual taxes all right let's take out the T chart and we put our percent in the percent column so 0.55 percent converted to a decimal is 0.55 divided by 100 so it's going to equal 0.0055 and then the assessed value of 172 000 is considered the total amount here so we're going to put that in the total column and now we see that we just have to multiply so 172 thousand dollars times 0.0055 equals nine hundred forty six dollars so the answer to this one is a number 10 if a capitalization rate of 10.5 percent is used what is the market value of an investment property assuming a net income of eight thousand four hundred twenty four dollars so let's take out the T chart we'll put the cap rate of ten and a half percent in the rate column converted to a decimal so that's going to give us 0.105 and now our net income of eight thousand four hundred dollars is just a portion of a total so that's going to go in the top so we see now that we have to divide so eight thousand four hundred twenty four dollars divided by 0.105 equals eighty thousand two hundred twenty eight dollars and fifty Seven cents so your answer to this one is B number eleven what is the housing expense ratio for a borrower with monthly housing expenses of six hundred ninety six dollars total monthly gross income of twenty four hundred dollars and total monthly obligations of nine hundred and sixty dollars so since our answers have percents we're going to bring out the T chart in this example they are asking for the housing expense ratio so we're going to take the 696 dollars and that will be put in our part section now we see that they have a total monthly income of twenty four hundred dollars so that's gonna go in our total column the total monthly obligations is what is considered a red herring and not needed at all so all we're going to do is divide 696 dollars by two thousand four hundred dollars and that equals 0.29 don't forget to multiply by 100 to convert that to a percent so 0.29 times 100 is going to equal 29 percent so our answer to this one is a number 12. Tony is able to pay 2 380 toward housing expenses what is his total monthly gross income if he wants to comply with the 2836 rule so let's bring out the t-chart and he is only able to pay 2 380 towards housing expenses so since he is only able to pay two thousand three hundred eighty dollars towards housing I'm going to put that in my part column since they want to know his total gross monthly income now since I'm talking about housing expenses I'm only going to use the 28 in this 2836 rule so the 28 goes in this column convert it to a decimal by dividing by 100 so that equals 0.28 now we just divide two thousand three hundred eighty dollars divided by 0.28 equals eight thousand five hundred dollars so that is his total monthly gross income so the answer to this one is d number 13. an agent was to receive a 35 share of a three percent gross commission the salesperson received four thousand five hundred dollars what did the property sell for let's bring out the t-chart so I see here that the salesperson received four thousand five hundred dollars so we're gonna have to work this one backwards remember in any commission there's two cuts you have the cut with the other agent and then you have the cut with your broker so we're going to work backwards in this example so the sales person received forty five hundred dollars so that's going to be considered our part Now The First Cut is going to be backwards so we're going to use the broker cut first which is 35 percent so we're going to put that in our rate column convert it to a decimal by dividing by 100 so that equals 0.35 now we're going to divide and we're going to find the total gross commission before the cut so forty five hundred dollars divided by 0.35 equals 12 857 and then point one four two eight six now that is going to be our part as well since that is now considered the total gross commission that was sent to the broker side now let's see how much the property sold for so now that is also going to be considered the part so you're going to put twelve thousand eight hundred fifty Seven dollars and fourteen let's just put 14 here but remember never convert that always leave your decimal to at least four decimal places and then we're going to cut it by three percent so that's going to go in my rate column convert that to a percent by dividing by 100 that equals 0.03 we're going to divide again so 12 857.14286 divided by 0.03 is going to equal our sales price for the house so that equals 428 thousand five hundred seventy one dollars so the sales price for this property was B number 14. a borrower pays two points on a two hundred fifty thousand dollar loan how much is one point worth let's take out the T chart since one point equals one percent then two points is going to equal two percent so we put the percent in the percent column convert it into a decimal by dividing by 100 so that equals 0.02 and then this loan amount of 250 000 dollars will go in our total column now we just multiply so 250 000 dollars times 0.02 equals five thousand dollars so the answer is B number 15. if the closing costs for a two hundred seventy five thousand fifty dollar home purchase are three point five percent of the purchase price how much is the total closing costs since we have a percent let's take out the T chart so three and a half percent is going to go in my rate column I'm going to convert it into a decimal by dividing by 100 so that equals 0.035 I take the purchase price of two hundred seventy five thousand fifty dollars and put it in the total amount now we're just going to multiply so 275 000 50 dollars times 0.035 equals nine thousand six hundred twenty six dollars and seventy five cents so the answer to this one is C number 16 the purchase price of the home Luke is buying is three hundred thousand dollars he's putting a hundred thousand dollars down and paying three discount points how much will this cost let's bring out the t-chart we see that the purchase price is three hundred thousand dollars and he's going to be putting a hundred thousand dollars down but then there's also discount points attached to this remember discount points are always applied to the loan amount so we have to find the loan amount and remember sales price minus down payment equals your loan amount so three hundred thousand dollars minus one hundred thousand dollars equals two hundred thousand dollars now that we found the loan amount we can now apply the discount points so that two hundred thousand dollars is going to go in my total column and remember three discount points is going to equal three percent so that goes in my rate column convert three percent to a decimal by dividing by one hundred that equals 0.03 now we multiply two hundred thousand dollars times 0.03 is going to equal six thousand dollars so the answer to this one is C number 17. if a property is listed for two hundred fifty thousand dollars and the buyer makes a down payment of twenty percent how much is the down payment let's bring out our t-chart again so it's listed for two hundred fifty thousand dollars and it is a down payment of 20 percent so let's put our total amount of 250 000 here and our rate of twenty percent here that's our down payment amount convert it into a decimal by dividing by 100 that equals 0.2 now we just multiply 250 000 dollars times 0.2 is going to equal 50 000 dollars so the answer to this one is C number 18. what is the interest rate on a hundred fifty thousand dollar loan that requires an annual interest payment of six thousand five hundred dollars let's bring out the t-chart so we are going to see here that we have an interest rate on a one hundred fifty thousand dollar loan that is the total amount which is a hundred fifty thousand here and then we have an annual interest payment of six thousand five hundred dollars so we're gonna just put that in our Park so now we just divide and then multiply by 100. so six thousand five hundred dollars divided by one hundred fifty thousand dollars equals zero point zero four three three three repeating so now we convert that into a percent by multiplying by 100 so 0.4333 times 100 is going to equal 4.333 percent so the answer to this one is C number 19. an apartment building has expenses of seven hundred thousand dollars effective gross income of one million dollars and a cap rate or capitalization rate of eight percent what is its value let's take out the T chart we see here that it has a cap rate of eight percent that can automatically go in our rate column let's convert it to a decimal by dividing by 100 so that equals 0.08 now in order to find the value of this property we have to subtract the building expenses from the effective gross income in order to find the net operating income so we take one million dollars minus seven hundred thousand dollars and that's going to equal three hundred thousand dollars that is now our net operating income or noi that amount can now go in the part section so I'll put three hundred thousand dollars there I now see that I have to divide so three hundred thousand dollars divided by 0.08 is going to equal three million seven hundred fifty thousand dollars so the answer to this one is a number twenty a buyer purchases a property for three hundred thousand dollars and obtains a mortgage loan of two hundred thousand dollars for thirty years at an interest rate of six percent the lender charges two points to Discount the interest rate to 5.75 percent how much did the borrower pay in discount points at closing since we're talking about discount points we know that that is going to be a percent now I see that they purchased the property for three hundred thousand dollars and they have a mortgage loan of two hundred thousand dollars since discount points are only applied to mortgage loans I'm going to use two hundred thousand dollars as my total amount so I'll put it in this column and since the lender charged two points remember one point equals one percent so two points is going to equal two percent so the two percent is going to go in this column I'm going to convert it into a decimal by dividing by 100 so that equals 0.02 now we see we have to multiply so two hundred thousand dollars times 0.02 is going to equal four thousand dollars in total discount points paid so the answer to this one is a okay now that we've gone through 20 very typical questions similar to the ones you may see on your exam we're going to use the same method to solve a question similar to one you may see on your exam that includes taxes Mills and assessed value number 21. if the assessor has determined that a property has an actual value of three hundred fifty thousand dollars and this class of property tax has an assessment rate of 29 percent and the tax rate is 22 mils what is the annual tax remember that when we are dealing with taxes we talk about the assessed value of the property so we have to find the assessed value of the property first so let's take out the T chart so we're going to use the assessment rate of 29 and put that in our rate column convert it into a decimal by dividing by 100 so that equals 0.29 so I'm going to take 29 of the actual value of the property to find the assessed value so 350 000 will go in this total column now we just multiply so 350 000 dollars times 0.29 equals one hundred one thousand five hundred dollars now that is our assessed value of the property since taxes are on assessed value and we are going to use the Mills we have to convert Mills to a decimal so I'm going to take 22 mils and divide it by one thousand that's what we do with Mills that's going to equal 0.022 since that could be treated as a percent we can put that in the rate column and this assessed value will be multiplied by The Mills so one hundred one thousand five hundred dollars times 0.022 equals two thousand two hundred thirty three dollars so the annual tax is C all right now that we've gotten used to the use of the T method let's change things up a bit but don't freak out it's still super easy the only thing we're going to change is that we're going to just flip the total amount column to the part or portion slot and the part or portion will now go where the total was in our previous examples and the rate column is now where your gross rent multiplier will be added follow along you'll see how easy this is let's start number 22. a property has a gross rent multiplier or grm of 8 and an annual gross rental income of sixty thousand dollars what is the estimated market value of the property let's take out the new t-chart remember to flip the total and the part columns and replace the percent with the gross rent multiplier so here we have a gross rep multiplier of eight I'm going to put that in my grm column and with it has a annual gross rental income of sixty thousand dollars so I'm going to add that to the part column so now we just multiply to find the estimated market value of this property so sixty thousand dollars times eight is going to give us an estimated market value of 480 000 for that property so the answer to this one is a 23. what is the monthly gross rent multiplier for a house that's sold for 269 500 and was rented for two thousand dollars per month okay since we're dealing with gross multiplier again remember to use the flipped t-chart with the total on top instead of on the left column so here is our new t-chart we see that the house sold for two hundred sixty nine thousand five hundred dollars so I'm going to put that here where the market value is going to go for the gross red multiplier and we see it was rented for two thousand dollars a month so I'm gonna put that here in my part column and now I see all we have to do is divide to find the gross rent multiplier so 269 500 dollars divided by two thousand dollars equals 134.75 so the answer to this one is B what a breeze okay now on to area problems when solving area problems we're not going to be getting a percent but we can use this T chart and set it up in a way where the total area is on top and your base and height are in these columns let's check out this example number 24. what is the area of a lot that measures 75 feet by 125 feet so let's bring out our new T chart with area since they are asking for the total area that means we're looking for this top portion so we're going to take 75 and put it in this column and take 125 and put it in this column remember you're multiplying so order does not matter I could have 125 on this side and and 75 on the other side and it still will come up with the same answer so 75 times 125 equals 9375 square feet so the total area for this lot is C number 25 if a lot has an area of nine thousand square feet and the frontage is 75 feet how deep is the lot so let's bring out our area t-chart and I see that the area is nine thousand so that's going to go up here and now the frontage is 75 feet so I could put it in either base or height so I'm gonna just put it here in 75. so now I divide 9000 divided by 75 equals 120 feet so the answer to this one is a wasn't that so much easier than trying to remember pages of formulas the T method is your real estate math Lifesaver so remember Future Real Estate Superstars stop pulling your hair out memorizing formulas just use the T method instead to Breeze through those math questions on your licensing exam need further clarification on the T method check out this video right here for more team method Madness or check the link in the description box below for more questions that use the team method if you found this video helpful be sure to like subscribe and turn on notifications by clicking on that Bell so you don't miss any of my tips for passing the real estate exam on the first try stay tuned after the video to find out how you can amp up your math skills with our number one selling product I'm Maggie from Maggie's real estate Academy here to make math easy for you happy studying and see you in the next video If you're looking to elevate your math understanding and boost your chances of acing the real estate exam I want to share something special with you introducing math skills for Real Estate success your ultimate companion to mastering real estate math past with Comprehensive exercises step-by-step explanations and invaluable tips this workbook is designed to help you conquer any math challenge that comes your way head over to just call maggie.com forward slash shop and grab your copy today trust me this workbook will be your secret weapon in becoming a mathwist in the world of Real Estate [Music] thank you

Channel: Just Call Maggie

Views: 32,448

Keywords: real estate math formulas for exam, real estate math questions, real estate math t-chart formula, real estate math formula, just call maggie, real estate exam, real estate exam prep, real estate exam questions, real estate math formulas, real estate exam practice questions, real estate math, real estate math practice, real estate education, real estate license, real estate training, florida real estate math formulas, real estate test questions, real estate calculations

Id: RHJdrXGKVYs

Length: 40min 54sec (2454 seconds)

Published: Mon Aug 21 2023