Real estate math formulas cheat sheet pdf (Free)

Are real estate calculations turning difficult for you? Are you worried it will be a problem for your licensing exam? Lexawise has created the perfect solution for you. We made our very own Math Guide, designed to be like a real estate Math cheat sheet to help you master those tricky formulas like a pro.

Numbers and calculations become complex when there’s no proper examples. That’s why our Math Guide Ebook includes formulas and explanations of concepts, helping you understand and solve math problems effectively.

Keep reading to discover what our e-book includes. It can help you pass the real estate exam and achieve your career goals!

A real estate math formulas cheat sheet pdf with detailed explanations

Memorizing formulas is important, but to succeed, you need to practice solving real questions to master real estate Math. First, understand the concepts behind the formulas. Next, study calculation examples. Finally, solve real estate math practice questions.

Our Math Guide helps you with the first two steps, and our general real estate exam prep with the last one. It’s like a whole package to be ready for any exam questions that might require calculations. Download 👇

What formulas are in our real estate math book?

Our Math Guide Ebook covers real estate exam math formulas, organized by topic in chapters for easy reference. Whenever you read the real estate book from start to finish or just check one concept, it will feel logical and keep its coherence. This guide helps with real estate math, improving problem-solving skills and passing exams easily.

In the book, you’ll find formulas and solutions about the following topics:

• Area and Volume Calculations
• Property Ownership (condominium assessment)
• Sale Contracts (percentage of listing price)
• Appraisal and Valuation (sales comparison approach, gross rent multiplier, cost approach, etc.)
• Financing (ROI, NOI, points, interest rate, debt-to-income, etc.)
• Investment (equity)
• Taxation (converting mill rates, tax rate, etc.)
• Commissions

Study Tips for better understanding of real estate math formulas

Some cases require a Study Tip for additional advice or explanation. This valuable pieces of information will help you understand parts of a formula or concept better. The ebook pdf helps understand with tips like the following:

Real estate math formulas cheat sheet with Annexes for conversions

Last but not least, the real estate formulas cheat sheet also includes information on common area, linear measures, and metric conversions in the Annexes. Do you need to convert inches to centimeters or a foot to inches? Check the table and get it done!

Image from Lexawise Math Guide E

Most common formulas explained

Here is a collection of some of the most commonly used formulas that you may need to use on the exam:

Capitalization Rate (Cap Rate):

• Formula: Cap Rate = (Net Operating Income / Property Value) x 100
• Net Operating Income: Income generated by the property after accounting for all necessary operating expenses but before deducting any mortgage payments, taxes, or depreciation.
• Property Value: The current market value of the real estate property
• Use: Assess the profitability of investment properties.

Mortgage Interest Calculations:

• Formula: Interest = Principal x Rate x Time
• Principal: The amount of money initially borrowed to buy the property. Over time, as you make payments, the principal amount decreases.
• Rate: The loan’s interest rate, usually expressed as an annual percentage.
• Time: The time period over which interest accrues. It’s usually expressed in years.
• Use: Determine the total interest on mortgage payments.

Area and Volume Calculations:

• Formulas: Area = Length x Width; Volume = Length x Width x Height
• Use: Calculate the size and volume of properties for valuation and development.

Loan-to-Value Ratio (LTV):

• Formula: LTV = (Mortgage Amount / Appraised Property Value) x 100
• Mortgage Amount: The total amount of money a borrower takes out as a loan to purchase a property.
• Appraised Property Value: The property’s estimated market value, as determined by a professional appraisal.
• Use: Evaluate the lending risk for mortgage approval.

Gross Rent Multiplier (GRM):

• Formula: GRM = Property Price / Gross Annual Rental Income
• Property Price: The total purchase price or current market value of the property. It represents the amount for which the property can be bought or sold.
• Gross Annual Rental Income: The total amount of rental income a property generates in a year before deducting
• Use: Quickly estimate the value of an income-producing property.

Break-Even Ratio (BER):

• Formula: BER = (Operating Expenses + Debt Service) / Gross Operating Income
• Operating Expenses: The costs associated with running and maintaining a property. Operating expenses include property management fees, maintenance costs, utilities (if not paid by tenants), insurance, and property taxes.
• Debt Services: The total amount of money required to cover the repayment of interest and principal on a debt for a specific period (usually annually).
• Gross Operating Income: The total income generated by the property, primarily through rental income, before deducting any operating expenses
• Use: Assess a property’s financial stability.

Amortization Calculations:

• Formula: Monthly Payment = [Principal x Interest Rate / 12] / [1 – (1 + Interest Rate / 12)^ -Total Number of Payments]
• Principal: the initial amount of the loan or the remaining loan balance you are borrowing. In the context of a mortgage, it’s the money you initially borrow to purchase your home minus any down payment.
• Interest Rate: The rate the lender charges for borrowing money; is expressed as a percentage. It’s usually an annual rate, known as the annual percentage rate (APR).
• Total Number of Payments: The total number of monthly payments you will make over the life of the mortgage. The term of your loan determines it.
• Use: Calculate monthly mortgage payments over the loan term.

For example, imagine you need to know how to calculate the Net Operating Income (NOI). The formula for the NOI is: NOI = Potential rent – Vacancy lost + Other Income – Operating expenses.

If you don’t know what a NOI is or the other terms in the formula, you’ll be in trouble. That’s why our real estate Math formula cheat sheet keeps this structure for each concept: brief definition of the term, formula, and how to solve it based on a given real estate question.

Like in this case explaining the Net Operating Income (NOI):

Net operating income (NOI) calculates how profitable a real estate investment can be. It is basically the property’s earnings after interest, taxes, and operating expenses like utilities and repairs.

Formula:

NOI = Potential rent – Vacancy lost + Other Income – Operating expenses

Examples:

A building has 7 units generating annual potential rent of $24,000 each. Vacancy is 12%, and annual expenses are $14,000. The laundry service yields $8,000. What is the NOI?

If:

Vacancy = 24,000 X 0.12

Vacancy = 2,880

Annual potential rent = 24,000 X 7

0.05 X 100

Then:

NOI = 168,000 – 2,880 + 8,000 – 14,000

NOI = $159,120

If you want to learn more about these formulas and how they work, go ahead and read the guide!

How do you download the full Lexawise real estate math formulas cheat sheet pdf?

Your ebook is available in pdf once you sign-up to our exam prep. With our prep you’ll not only have access to it, but to a lot study resources to help you achieve exam success, including a Real Estate Exam Prep Ebook that explains further main real estate exam vocabulary.

Our toolkit offers:

• Real estate agent/broker exam prep
• 4,500 expert-crafted questions and answers with detailed explanations
• National and state-specific content with your state’s latest rules and regulations
• Unlimited practice tests
• Realistic timed exams
• 800+ flashcards
• Explainer videos
• Audios lessons
• Tests by topic: focus your study efforts in selected categories (including math!)
• Study resources: Summary Guide and Math Guide Ebooks
• Progress Indicator: Know when you are 100% ready to pass your license test.
• Study anywhere: apps for iOs and Android devices, and user-friendly design that works on all devices.

Step by Step: Downloading the full real estate math formulas cheat sheet

Once you’re a Lexawise student, you can access the Math Guide easily from the Lexawise’s dashboard.

Download from desktop computer

Here are the steps to download the ebook pdf from a desktop computer.

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Download from mobile devices

Follow these steps for downloading the real estate Math ebook from a mobile device like a phone or tablet.

Summing-up

Real estate math can be complicated initially, especially if the main concepts are still hard to grasp. Even if you pass your state’s mandatory courses, it’s normal to still have doubts or make some errors.

The key is to practice, perfect everything you’ve learned, and improve your calculation skills further. That’s what Lexawise exam prep is for, to help you in that final stretch and pass your licensing test on the first try. This is not only true in real estate math formulas but also in every content you’ll be facing in the exam.

You may be here for the Math Guide pdf, but you can leave with a whole package of study resources for an unbeatable price. 100% exam success guarantee or your money back!

FAQs

Do I need to memorize math formulas for the real estate exam?

Yes, it is recommended to memorize some key math formulas for the real estate exam. While some questions may be intuitive, remembering specific formulas will help you save time and avoid mistakes during the exam.

How much Math is on the real estate exam?

Math is a part of your real estate licensing exam in every state. On average, math questions make up 10-15% of the test, although the exact number can vary by state. In some cases, there may be as few as 5 questions or as many as 20.

Is real estate math hard?

The good news is that real estate math is not as hard as it seems. Most of the formulas involve basic math, such as percentages, fractions, and unit conversions. The key is practice – the more problems you solve now, the easier the formulas and calculations will feel come exam day.

How important is math in real estate?

While you may not need to solve math problems every day after becoming licensed, the math skills you develop now will be essential throughout your career.

What types of math are used in real estate?

Real estate math is used for various purposes, such as:

• Determining the size of a property by calculating square footage or acreage.
• Analyzing the profitability of investment properties using metrics like the gross rent multiplier (GRM) or net operating income (NOI).
• Estimating costs such as property taxes, insurance, and interest payments.
• Understanding financing options, including annual interest rates and monthly payments.