Real Estate Investor Math Tools

The first lesson in an online course to teach real estate investors the mathematical tools for valuation and return on investment.

One of the most visited pages in the Real Estate Investment category at Real Estate Business Guide.  Learn how compound interest is calculated.

Steps to calculate the profit of a real estate investment in the Investing category at Real Estate Business Guide at About.com.  This is one of a series of lessons in the free Real Estate Investment Math Email Course.

Learn how to calculate the loan to value ratio for a real estate investment.  You need to know, as the lenders use this as one yardstick to decide whether to give you a loan.

This is one of a series of lessons in the free Real Estate Investment Math Email Course.

Examples of different levels of real estate leverage on a typical purchase of a property.

This is one of a series of lessons in the free Real Estate Investment Math Email Course.

Learn step-by-step how to calculate Rental Yield on a real estate investment property.

This is one of a series of lessons in the free Real Estate Investment Math Email Course.

Explains the uses and calculation of the Gross Rent Multiplier for real estate investment property.

This is one of a series of lessons in the free Real Estate Investment Math Email Course.

The ever-popular capitalization rate, or cap rate calculation is lined out for you here.

Using Cap Rate, or Capitalization Rate to compare the values of properties you're considering for investment.

Use Cap Rate to justify your asking price if you're a seller, or to justify the offer if you're a buyer.

How to calculate Gross Potential Income GPI in real estate investing.  Fully occupied income calculation.

You need some kind of estimate of vacancy and another for losses due to non-payment of rent.  This is how it's done.

Gross operating income is calculated from Gross Potential Income and vacancy and losses.  Learn how to do it here.

We're getting closer to the real profitability of your real estate investment with the NOI calculation.  Learn how to do it easily here.

Cash flow is quite important, as it disregards the deductibility for tax purposes of expenses. A tax return tells you some things, but cash flow tells you more.

If two properties are similar, the one which will produce the best first year return may be the better short term investment.

Lenders use the break-even ratio as one of their analysis methods when considering providing financing for a real estate investment property. Too high of a break-even ratio is a cautionary indicator.

Once you've learned about them, download the spreadsheets. One is the Real Estate Investment Calculator Sheet, and the other is the same sheet with sample data in it to show you formats.

The transfer of title to real estate with consideration is taxed in many states. The methods and tax rates vary by state. Some states use "tax stamps" that are affixed to the deed and cancelled. Generally, the calculation begins with the purchase price of the property.

Taking a neighborhood that has low assessed values for its properties, but it's surrounded by higher valued homes, there may be a property tax equalization factor involved.

At the closing table in a real estate rental property transaction, any rents that were paid to the seller prior to closing will need to be prorated. The seller will owe the buyer any rent amounts from closing through the end of the rental period, usually the month.

As insurance policy premiums are normally paid in advance, if a buyer is assuming a policy in a real estate investment transaction, the policy premium must be prorated.

In most new real estate mortgage loans, there is a HUD-1 item for the Buyer to prepay the lender for the interest on the loan from the closing date to the end of the month of closing.

Real estate investors, if it's financially beneficial, can assume an existing mortgage from the seller when acquiring an investment property. When this is done, there is a proration required for the assumed mortgage interest.