Real Estate Math
A Massachusetts investor buys land for $200,000, develops it for $650,000, and sells the completed property for $960,000. The investor also paid $19,200 in real estate commissions. What is the net profit?
A$90,800✓ Correct
B$110,000
C$109,200
D$91,200
Explanation
Total costs = $200,000 + $650,000 + $19,200 = $869,200. Net profit = $960,000 − $869,200 = $90,800.
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Key Terms to Know
Amortization
The gradual repayment of a loan through scheduled periodic payments that cover both principal and interest.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Loan-to-Value Ratio (LTV)The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.
Debt-to-Income Ratio (DTI)A lender's measure of a borrower's monthly debt obligations relative to their gross monthly income, used to evaluate loan eligibility.
Math Concepts
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