Need help with Real Estate Math?

Question

Mrs. Thompson purchased her home for $283,000 and sold it for $345,260. What percent of profit did she realize?


Thank You.

Answer 1

22%

Answer 2

Previous answers (22%) have these assumptions:
a) She paid cash for the house
b) She incurred no other expenses besides the purchase.

Neither of these are very likely in the real world.
Say she got a 90% loan on the property, 30 year fixed at 7%. Therefore, she paid $28,300 to purchase it, plus closing costs. Lets put closing costs at $5000. Lets say she has holding costs of $2200 a month, including mortgage, taxes, insurance, and maintainance. She also has rental income of $1800 per month. She sells the property 2 years later for the $345,260. She then incurs realtor fees of 6% and other closing costs of $1500.
So what is her ROI (Return On Investment).

Costs = 28,300 + 5000 + (2200-1800)*24 + .06*345,260 + 1500
= 34,800 + 9600 + 20,715.6
= $65,115.6

Pay off at closing = remaining on loan = $249338.43 (per interest.com)

Income = $345,260

Therefore, Profit = 345,260 - 249,338.43 - 65115.60 = $30,805.97

Therefore ROI% = 30,805.97/65,115.60 = 47.3%

Obviously, this is based on a lot of assumptions for costs. If you have the real values, plug them in and see the real ROI.

Answer 3

22%

Answer 4

345,260 - 283,000 = 62,260; 62,260/283,000 = .22 or 22% profit

Answer 5

Impossible to know unless you tell us the expenses she incurred owning and selling the property. If she put $100,000 into upgrades, she lost money.

Answer 6

Excluding taxes

(345260-283000)/283000 22% profit

Check your work

283,000*1.22= 345260

Answer 7

are you kidding? Seriously, get a math tutor. These are basic life skills you need.