important_formulas
Table of Contents
Important Real Estate Formulas (CA Exam)
Valuation & Appraisal
- Market Value (Income Approach)
- Value = NOI ÷ Cap Rate
- Cap Rate = NOI ÷ Value
- NOI: Net Operating Income
- Gross Rent Multiplier (GRM)
- GRM = Sales Price ÷ Gross Rent
- Value = Gross Rent × GRM
- Gross Income Multiplier (GIM)
- GIM = Sales Price ÷ Gross Income
- Value = Gross Income × GIM
- Cost Approach
- Value = Land Value + Replacement Cost − Depreciation
- Improvement Value = Property Value - Land Value
- Net Income = Market Value × Cap Rate
Financing
- Loan Amount
- Loan = Purchase Price − Down Payment
- Points
- 1 Point = 1% of the loan amount
- Down Payment
- Down Payment = Purchase Price × Down Payment %
- Loan-to-Value (LTV)
- LTV = Loan Amount ÷ Property Value
- Equity
- Equity = Market Value (or Sales Price) − Loan Balance
- Alternatively, Equity = Market Value - Debt
Income & Investment
- Net Operating Income (NOI)
- NOI = Gross Income − Operating Expenses
- Cash Flow
- Cash Flow = NOI − Debt Service
- Rate of Return (basic)
- Rate of Return = Annual Income ÷ Investment
Amortization
- Monthly Interest
- Interest = Loan Balance × Periodic Interest Rate
- Principal Payment
- Principal = Monthly Payment − Interest
- New Loan Balance
- New Balance = Old Balance − Principal Paid
Brokerage & Commissions
- Commission
- Commission = Sales Price × Commission Rate
- Broker Gross Income
- Gross Income = Total Commissions Earned (before expenses)
Unit Conversions
Length
| Conversion | Equivalent |
|---|---|
| 12 inches (in) | 1 foot (ft) |
| 3 feet (ft) | 1 yard (yd) |
| 5,280 feet (ft) | 1 mile (mi) |
| 1 mile (mi) | 1,760 yards (yd) |
| 1 mile (mi) | 63,360 inches (in) |
Area
| Conversion | Equivalent |
|---|---|
| 1 square foot (sq ft) | 144 square inches (sq in) |
| 1 square yard (sq yd) | 9 square feet (sq ft) |
| 1 square rod | 272.25 square feet (sq ft) |
| 1 acre | 43,560 square feet (sq ft) |
| 1 acre | 4,840 square yards (sq yd) |
| 1 acre | 160 square rods |
| 1 section | 640 acres |
| 1 township | 36 sections |
| 1 square mile (sq mi) | 640 acres |
| 1 hectare (ha) | ~2.471 acres |
| 1 acre | ~0.4047 hectares (ha) |
Volume
| Conversion | Equivalent |
|---|---|
| 1 cubic foot (cu ft) | 7.48 gallons |
| 1 gallon | 4 quarts |
| 1 quart | 2 pints |
| 1 pint | 2 cups |
| 1 cup | 8 fluid ounces (fl oz) |
Quick Formulas
- Square / Rectangle Area: length × width
- Triangle Area: (base × height) ÷ 2
- Circle Area: π × r²
- Circle Circumference: 2πr
Memorize These
- 1 acre = 43,560 sq ft
- 1 mile = 5,280 ft
- 1 section = 640 acres
- 1 hectare ≈ 2.471 acres
Exam Tip
- If it says no payments made → loan balance is unchanged
- If it says gross → ignore expenses
- If it says net → subtract operating expenses
- Cap rate problems always revolve around NOI
important_formulas.txt · Last modified: by reidjs