Real Estate Math Practice Exam

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• What is Gross Potential Rent (GPR) vs. Effective Gross Income (EGI)?
• How is the Equity Multiplier calculated?
• Balance (B) is
• What does GPR stand for in real estate metrics?
• If an investment requires $150,000 and annual cash flows are $30,000, what is the Payback Period?
• What does 'effective age' represent in appraisal?
• CapEx in NOI analysis?
• 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?
• Which statement about the equity multiplier is true?
• Compute the equity multiplier given Total Assets of 1,000,000 and Total Equity of 500,000.
• What is the commission amount on a sale price of 310,000 at 7 percent?
• 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?
• How is price per square foot calculated?
• 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?
• A parcel of land that is 5 miles on each side would be described as
• 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?
• 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?
• A commission (C) is
• Cap rate compression is characterized by which of the following effects on property value for a given NOI?
• 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?
• Convert 140 feet 9 inches to decimal feet.
• A small multifamily property generates 50,000 in rental income with expenses of 45,000 annually, including 35,000 in debt service. The property appreciates about 25,000 a year. What is the property’s cash flow?
• If the gross multiplier is 6 and the gross income is $40,000, what is the property value using the GRM method?
• How many acres are contained in 1/64 of a section?
• Cash-on-Cash Return formula equals?
• What is the assessed value before applying the equalization factor, given a market value of $255,000 and an assessment rate of 35%?
• What is the difference between a gross lease and a net lease?
• Which statement about reserves for replacement 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 $168,000 and the decimal from step 2 is 0.84, what is the final price?
• 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?
• In what scenario would market value and investment value diverge most?
• What is the remaining acres after removing street area from a 100-acre tract if streets take 1/8?
• 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?
• Which statement correctly describes PGI and EGI relationship?
• Which statement about investment value is true?
• What does leverage mean in real estate investing?
• If the assessed value is $89,250 and the equalization factor is 1.25, what is the adjusted assessed value?
• If net operating income is 58,300 and the capitalization rate used is 8 percent, what is the estimated 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?
• If a 64-acre tract is sold for $2.50 per square foot, what is the total price?
• 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?
• What is the profit (P) in investment terms?
• Convert 75 feet 6 inches to decimal feet.
• What is the amount invested (A)?
• In the formula Value = Income / Rate, what does "Rate" represent?
• What is the total price of 80 acres at $1,500 per acre?
• Which statement is true about market value relative to investment 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 $150,000 and the decimal from step 2 is 0.75, what is the final price?
• How many acres are contained in the N1/2 of the SW1/4 of a section?
• 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?
• 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?
• 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?
• 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?
• 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?
• In a price problem, after you have subtracted the percentage from 100%, you
• In a 1031 exchange, the property exchanged must be which of the following?
• Which lease type typically passes most operating expenses to the tenant?
• What is the rate of commission (R)?
• If a property's annual net income is 24,000 and it is valued at 300,000, what is its capitalization rate?
• What is a lease escalator?
• What is the approximate monthly P&I payment on a $350,000 loan at 4.75% for 30 years?
• What is the total acreage of SW1/4 plus SE1/4 of a section?
• 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?
• Operating Expense Ratio is defined as which ratio?
• 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?
• 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?
• 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?
• Which statement best defines Net Operating Income (NOI)?
• How do you calculate Cash Flow Before Tax?
• Given PGI = 150,000, Vacancy Rate = 5%, and Other Income = 10,000, what is EGI?
• If a land parcel is described as a mile square, its side length is
• Which statement defines Payback Period?
• In a double-net lease (NN), which costs does the tenant typically pay?
• Which statement best describes the role of risk in investment value?
• 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?
• 1 mile is equal to
• Which statement best describes the purpose of reserves for replacement in real estate finance?
• Which expense is excluded from NOI?
• The area of a square with lengths of 4 miles on each side would be
• Before applying the capitalization formula, what must you determine?
• 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 $68,000 and the decimal from step 2 is 0.68, what is the final price?
• What fraction of a section is represented by SE 1/4 of SE 1/4 of SE 1/4?
• What is the rate of capitalization (R)?
• What is Interest (I) in loan terms?
• Depreciation for residential rental property is typically calculated using which method?
• What is the primary purpose of a 1031 exchange?
• 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?
• LTV ratio is computed as?
• How many rods are in half a mile?
• 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 $75,600 and the decimal from step 2 is 0.84, what is the final price?
• Which measure is affected by vacancies and credit losses?
• 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?
• Which item is excluded from operating expenses?
• In a cost problem (CAPS), you first add
• How is depreciation for a residential rental property typically calculated?
• In a net lease, which costs are typically paid by the tenant in addition to base rent?
• In vacancy calculations, which statement is correct?
• What is the decimal form of 8%?
• PITI includes which components?
• If the broker received a 6.5 percent commission that was $10,400, what was the sales price of the house?
• How are leasehold improvements accounted for in financial statements?
• If a rural property contains 80 acres and is sold for $2,000 per acre, what is the total sales price?
• To solve a loan problem, you would use the formula for interest:
• Break-even Occupancy is the occupancy level needed to cover fixed operating expenses and debt service. Which formula expresses Break-even Occupancy?
• 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 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?
• What DSCR threshold do lenders commonly require for commercial loans?
• 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?
• 1 acre is equal to
• 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?
• On a building purchased for 85,000 with 10% down, what is the down payment?
• Which formula represents the standard fixed-rate mortgage monthly payment (P&I) given the loan amount, monthly rate, and total payments?
• What is the purpose of an escrow account in mortgage transactions?
• How do you account for vacancies and credit losses in a pro forma?
• What is a limitation of the Gross Rent Multiplier (GRM) as a valuation metric?
• Which statement best describes how to calculate the commission?
• 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?
• CAM charges are best described as:
• 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 leverage in relation to risk and return?
• 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?
• Which statement correctly contrasts market value with investment value?
• What is the primary purpose of an escrow impound account?
• 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?
• In the income approach, what is NOI used for?
• Market value and investment value same when?
• Which statement defines holding period return?
• Which statement correctly contrasts a fixed-rate mortgage with an adjustable-rate mortgage (ARM)?
• If a borrower must pay one point for a $90,000 loan, how much money must he or she pay?
• Cap rate is commonly computed as which formula?
• What is the total area in square feet of a rectangular parcel measuring 400 ft by 640 ft?
• 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?
• What is depreciation recapture?
• The net operating income is requested when the property is appraised for $420,000 and the capitalization rate is 6%. What is the NOI?
• To determine the rate of return given profit and amount invested, which formula would you use?
• Investment value differences across investors?
• 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?
• The area of a square is
• What is the total commission earned on a sale of $225,000 at a 6% commission rate?
• 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?
• In a 100-acre tract, the streets require 1/8 of the total land. How many acres are allocated to streets?
• How is the monthly mortgage rate derived from the annual rate?
• 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?
• If NOI = 120,000 and Cap rate = 6%, what is the property value?
• Which statement best defines Potential Gross Income (PGI)?
• GRM is calculated as?
• Which item would be considered Other Income in EGI calculations?
• In a cost problem, the last step is to divide
• DSCR is defined as what ratio?
• Which statement best defines market value for real estate?
• What is the value (V) in this context?
• How do you prorate property taxes at closing when ownership begins mid-year?
• Which statement best describes the profit in an investment?
• A one-acre parcel is sold at $2.50 per square foot. What is the total selling price?
• Which statement best describes why investment value may differ between investors?
• 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?
• If a property sells for $500,000 and the rate of commission is 6%, what is the commission?
• Which statement best distinguishes between the interest rate and APR?
• What is the loan amount on the 85,000 building after the 10% down payment?
• Which statement best defines holding period return?
• 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?
• Which statement best describes what GRM measures?
• If Annual Net Income is $60,000 and Capitalization Rate is 6% (0.06), what is the estimated Value?
• What is an interest-only period?
• Which of the following best describes the purpose of converting a percentage to a decimal in these problems?
• 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?
• 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?
• Which statement about debt service is accurate?
• Which term represents the market value of the income-producing property?
• 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 NOI is $50,000 and property value is $500,000, what is the cap rate?
• A square parcel with side length 5 miles has an area of
• In a cost problem, once you have added the percent that the price has increased to 100%, you convert
• If Operating Expenses are $60,000 and Effective Gross Income is $350,000, what is the Operating Expense Ratio?
• Rate of interest (R) is
• What is the acreage of the NE quarter of the NW quarter of a standard section?
• 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?
• If the NOI remains unchanged and the cap rate falls, what happens to the property value?
• What was the price per front foot for a 100' x 125' lot that sold for $125,000?
• Which unit is used to describe 43,560 square feet?
• If hold period cash flows are 15,000; net sale proceeds 30,000; initial investment 20,000, what is the ROI?
• 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?
• A parcel of land can also be described by
• 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?
• 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 income (I) in this context?
• For a price problem, you first subtract
• If a square parcel has an area of 16 square miles, the length of each side is
• 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?
• If the loan balance is 76,500 and discount points are 2 percent, what is the cost of the discount points?
• Which statement correctly distinguishes market vs investment value?
• What does the rate of return (R) represent?
• 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?
• 1 rod is equal to
• Cap Rate is calculated as?
• To solve an investment problem, which expression correctly represents the formula described?
• If a loan amount is $420,000 and the appraised value is $600,000, what is the LTV ratio?
• 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?
• Which formula correctly computes Effective Gross Income (EGI)?
• 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?
• 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?
• Which item is least likely to affect market value?
• 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 real estate terminology, what does the sales price (P) represent?
• In a gross lease, who typically pays most of the operating expenses?
• Which factor would likely affect investment value but not market value?
• 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?
• To solve a commission problem, which expression represents the calculation of the commission?
• 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?
• Which statement best describes IRR vs Cap Rate?
• If a property sells for $250,000 and the broker's commission rate is 6 percent, what is the total commission?
• A 2.92 acre tract contains how many square feet?
• When modeling ROI, which components are used to estimate the return on sale?
• 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?
• In a capitalization (value) problem, which formula determines the value of a property?
• Which is NOT a driver of market value?
• 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?
• 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?
• If an investor uses a higher discount rate for investment value, what happens?
• What is the area in acres of the NW1/4 of the SE1/4 of Section 10 in a standard government survey?
• Which statement most accurately describes market value?
• Given a Purchase Price of 800,000 and Gross Annual Rent of 100,000, what is the Gross Rent Multiplier (GRM)?
• 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?
• Three discount points on a $120,000 loan equate to an actual loan amount received by the borrower. What is that amount?