b. What cap rate will produce a value of $550,000?

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Dominick Small
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1 1. If 25% of the homes in North York have 4 or more bedrooms and 62% have 3 bedrooms, then what number of homes in this community of 85,000 have 3 or more bedrooms? 2. The commission on a recent transaction was $8,978 and the commission rate was 4.3%. Based on this information, what was the selling price of the house? 3. A business owner may purchase a commercial property to rent out to tenants, and out of which he will operate his own business. He estimates a net operating income of $44,000. a. What is the estimate of value based on a 10.3% cap rate? b. What cap rate will produce a value of $550,000? 4. An investor is considering a commercial property with an effective gross income of $185,000 and annual operating expenses of $110,000. The structure contains 7,200 square feet. How much should the investor pay per square foot and per square metre based on a capitalization rate of 9.7%? 5. The budget established for a municipality is $2,950,000 and the total tax base for that community is $77,000,000. What tax rate is required to meet the budget?

2 6. With a tax rate of 2.91%, what would be the tax on a home with an assessed value of $329,900? What would the land transfer taxes be when this property sells? 7. A property with an assessed value of $385,000 sells with a closing date of May 17 th. The seller of this house has a tenant who will continue to remain on the premises. The seller has always collected rent from the tenant at the end of the month (in arrears) instead of on the first of the month (in advance). The seller fills the 200 gallon tank of fuel filled the day before closing at a cost of $2.18 per gallon. The tenant pays the May rent as usual on May 31 st. The tax rate for the current year is 2.35% and the year s taxes have not been paid. What credit, if any, will the seller receive? 8. If the net operating income before depreciation of a building is $38,000 annually and the overall capitalization rate expected of this type of property is 12%, then what is the value of the property? 9. A builder is considering the purchase of a parcel of land (28,530 square feet), which according to municipal officials can be severed into 4 equal parcels following a 10% allocation for a pedestrian footpath required by the city. What will the square footage be for each parcel of land?

3 10. A house has an assessed value of $102,000, but this is only $80% of its current market value. What is the current market value? 11. Salesperson Steve is preparing for a listing presentation and is comparing two recent sales. 591 Sheppard Ave. E, listed at $875,000 sold for $35,000 less Bayview Ave., listed at $775,000 sold for $750,000. Which house had the smaller selling to listing price percentage difference? 12. A buyer has a yearly gross income of $68,000. What is the buyer s GDS if P&I annual mortgage payments are $14,800 with annual taxes of $2,400? 13. A buyer with a yearly gross income of $65,000 is considering a property assessed at $189,000 with an annual tax rate of 3.2%. What is the maximum monthly principal and interest payment permitted with a GDS ratio of 32%?

4 14. A buyer is considering a home assessed at $214,900 with principal and interest payments of $1232 per month. The municipality in which the home is located has established a budget of $3,160,000 and has a local tax base of $79,000,000. What annual income would the buyer need to qualify for the mortgage if the lender uses a GSD ratio of 28%? 15. If a buyer earns $68,000 and is facing tax payments of $2220 per year on a property he wishes to purchase, what is the maximum he can afford to put towards principal and interest payments per month if a TDS ratio of 40% applies and he has additional car and loan payments totaling $535 per month? 16. A buyer assumes an existing first mortgage with an outstanding balance of $57,000 at an interest rate of 10.3% and arranges a new second mortgage for $18,700 at a rate of 14.25%. What is the average overall interest rate on the total debt?

5 17. A buyer is considering a mortgage at 12% per month, calculated semi-annually not in advance. According to the Interest Act, what is the maximum effective rate that can be charged per annum? 18. A buyer requires $8000 in additional funds for closing expenses. His bank has agreed to loan this amount, based on an 8.1% annual rate compounded monthly, for three months. The buyer does not pay any interest until the loan comes due at the end of the three months. How much combined principal and interest will he owe at that time? 19. A buyer is considering three different terms for his $125,000 mortgage. Of the following options, which has the lowest payment? a. 7.25% amortized over 20 years b. 7.75% amortized over 25 years c. 6.75% amortized over 15 years

6 20. Calculate the closing costs given the following information a. Current value assessment: $283,000 b. Purchase price: $287,900 c. Closing Date: June 15 d. Taxes: paid by the seller for the full year e. Land Transfer taxes: based on the selling price f. Legal Fees: 0.75% of the sale price g. Tax Base for the community: $94,643,000 h. Municipal Budget: $2,115,000 i. Lot Size: 100 by 125 j. Special Notes: The grade level on approximately 50% of the lot needed to be raised by 1 foot 6 inches to permit proper drainage in accordance with specifications in the subdivision agreement. The seller paid a local contractor who charged $21.30 per cubic yard for the work, to be reimbursed by the buyer upon closing.

b. What cap rate will produce a value of $550,000?

b. What cap rate will produce a value of $550,000? OREA Test #1 Math Review 1. If 25% of the homes in North York have 4 or more bedrooms and 62% have 3 bedrooms, then what number of homes in this community of 85,000 have 3 or more bedrooms? 2. The commission