Notes:
WORKBOOK
Although surrounded by a world of computers, a real estate professional still
relies on the convenience of a hand-held financial calculator that will quickly
compute loan payments, qualifying ratios and multiple ‘what if’ scenarios. In
today’s real estate market, it is essential to provide both buyer and seller with
the most accurate information available.
Upon completion of Module I of this course, you will be comfortable with the
basic functions of the Qualifier Plus® IIIx and Qualifier Plus® IIIfx calculators
and you’ll be able to solve several advanced real estate finance functions,
including rapid and accurate qualification scenarios. Your confidence will
improve and your clients will benefit from your on-the-spot solutions.
Module II of this course features instruction for advanced real estate finance
concepts, including bi-weekly and balloon payments, future values,
adjustable rate mortgages (ARM), combo loans, and more. You’ll soon
master the QPIIIx and QPIIIfx and be able to offer quick and accurate
answers to important real estate finance questions.
Real estate investment and commercial lending concepts are covered in
Module III of this course, designed for use with the QPIIIfx calculator only.
Multiple cash flows, internal rate of return (IRR), net present value and net
future value (NPV/NFV) are addressed in detail.
If you have any questions about this course, the QPIIIx calculator or any of
our other innovative products, please ask your instructor or training facility, or
contact us directly:










Training Department
Real Estate and Financial Products
Calculated Industries
4840 Hytech Drive
Carson City, NV 89706
Toll Free: (800) 854-8075
Direct: (775) 885-4900
Fax: (775) 885-4949
training@calculated.com
www.calculated.com
This workbook and associated content are designed to provide accurate information and relevant
examples. However, neither Calculated Industries, the presenter, the author, nor the publisher are
engaged in rendering legal, tax or other professional service and assume no liability or risk in association
with the use of these materials. The keystroke procedures and support materials have been provided
solely on an ‘as is’ basis, and if assistance is required, the services of a competent professional advisor
should be sought.
Qualifier Plus®
Training Program
-- 1 --
© 2004 Calculated Industries RE-8-3/04
(Page Purposely Left Blank)
Please Note: The User’s Guides included with the Qualifier Plus IIIx and Qualifier Plus IIIfx provide extensive
coverage of many of the advanced features of these calculators. The concepts and keystrokes illustrated below
have been provided for the purposes of this course. Please refer to the User’s Guide for functions and concepts
not covered in this course, or contact your instructor to inquire about additional courses that may be available.
Contents:
Module I - Introductory ............................................................................................... 10
Chapter 1 .............................................................................................................................. 10
The Basics .......................................................................................................................................... 10
Power On ....................................................................................................................................................... 10
Clear .............................................................................................................................................................. 10
Second Functions .......................................................................................................................................... 11
Decimal Settings ............................................................................................................................................ 11
Recall  Key ................................................................................................................................................. 12
Triple-Zero  Key ............................................................................................................................................ 12
Chapter 2 .............................................................................................................................. 13
Date Math ........................................................................................................................................... 13
Practice Problems: Chapter 2............................................................................................................ 14
Chapter 3 .............................................................................................................................. 15
Overview of Financial Keys ................................................................................................................ 15
Loan Amount ................................................................................................................................................. 15
Payment......................................................................................................................................................... 15
Term .............................................................................................................................................................. 15
Interest ........................................................................................................................................................... 15
Chapter 4 .............................................................................................................................. 16
Sales Price, Down Payment and Loan-to-Value (LTV) ...................................................................... 16
Practice Problems: Chapter 4............................................................................................................ 17
Chapter 5 .............................................................................................................................. 18
Calculating Payments ......................................................................................................................... 18
Monthly (P&I) Payment .................................................................................................................................. 18
PITI and Total Payment ................................................................................................................................. 19
Paying Off a Loan Early ................................................................................................................................. 21
Practice Problems: Chapter 5............................................................................................................ 22
Chapter 6 .............................................................................................................................. 23
Amortization ........................................................................................................................................ 23
Simple Amortization ....................................................................................................................................... 23
Amortization and Mortgage Interest Deduction .............................................................................................. 23
Practice Problems: Chapter 6............................................................................................................ 26
Chapter 7 .............................................................................................................................. 27
Qualifying ............................................................................................................................................ 27
Qualifying ....................................................................................................................................................... 28
Practice Problems: Chapter 7............................................................................................................ 30
Module II - Comprehensive .........................................................................................34
Chapter 8.............................................................................................................................. 34
Advanced Qualifying ........................................................................................................................... 34
Qualifying with Various Ratios........................................................................................................................34
Qualifying by Income-Needed ........................................................................................................................35
Practice Problems: Chapter 8............................................................................................................. 37
Chapter 9.............................................................................................................................. 38
Payment Options ................................................................................................................................ 38
Bi-Weekly Loan ..............................................................................................................................................38
Adjustable Rate Mortgage (ARM) ..................................................................................................................39
Low-Start Payment / Negative Amortization: ..................................................................................................41
Interest-Only Payment ...................................................................................................................................42
30- vs. 15-Year Loan......................................................................................................................................42
Practice Problems: Chapter 9............................................................................................................. 44
Chapter 10............................................................................................................................ 45
Annual Percentage Rate (APR) ......................................................................................................... 45
Practice Problems: Chapter 10........................................................................................................... 47
Chapter 11............................................................................................................................ 48
Remaining Balance / Balloon Payment .............................................................................................. 48
Practice Problems: Chapter 11........................................................................................................... 49
Chapter 12............................................................................................................................ 50
Estimated Tax Savings ....................................................................................................................... 50
Practice Problem: Chapter 12 ............................................................................................................ 51
Chapter 13............................................................................................................................ 52
Rent vs. Buy Comparisons ................................................................................................................. 52
Practice Problem: Chapter 13 ............................................................................................................ 53
Chapter 14............................................................................................................................ 54
Future Value / Appreciation ................................................................................................................ 54
Practice Problem: Chapter 14 ............................................................................................................ 54
Chapter 15............................................................................................................................ 55
Prices and Yields / Trust Deeds ......................................................................................................... 55
Practice Problem: Chapter 15 ............................................................................................................ 56
Chapter 16............................................................................................................................ 57
Combo Loans ..................................................................................................................................... 57
Practice Problems: Chapter 16........................................................................................................... 60
Chapter 17............................................................................................................................ 61
Calculating Commission / Listing Price .............................................................................................. 61
Practice Problems: Chapter 17........................................................................................................... 62
Chapter 18............................................................................................................................ 63
Additional Financial Examples............................................................................................................ 63
Practice Problems: Chapter 18........................................................................................................... 65
Chapter 19............................................................................................................................ 66
Preference Settings ............................................................................................................................ 66
Chapter 20............................................................................................................................ 67
Case Study – Putting It All Together and Selling the Numbers .......................................................... 67
Module III – Introduction to Commercial Investment ............................................... 72
Chapter 21 ............................................................................................................................ 72
Assumptions ....................................................................................................................................... 72
Basic Assumptions Before You Begin............................................................................................................ 72
Chapter 22 ............................................................................................................................ 74
Case Study ......................................................................................................................................... 74
The Case Study 10-Plex ................................................................................................................................ 74
Chapter 23 ............................................................................................................................ 75
Step #1 – Getting Started ................................................................................................................... 75
The Property Profile Form.............................................................................................................................. 75
The Two Cash Flow Equations ...................................................................................................................... 75
Chapter 24 ............................................................................................................................ 77
Step #2 – Using Benchmarks ............................................................................................................. 77
Cash on Cash (C/C)....................................................................................................................................... 77
Gross Rent Multiplier (GRM) .......................................................................................................................... 78
Cost Per Square Foot .................................................................................................................................... 78
Capitalization Rate (Cap Rate) ...................................................................................................................... 79
Chapter 25 ............................................................................................................................ 80
Step #3 - Uneven Cash Flows and the "Cash-Asset-Cash Model" .................................................... 80
The “Cash-Asset-Cash” Model ...................................................................................................................... 80
Inputting Uneven Cash Flows ........................................................................................................................ 81
Chapter 26 ............................................................................................................................ 84
Step #4 - Internal Rate of Return and Net Preset Value .................................................................... 84
Internal Rate of Return (IRR) ......................................................................................................................... 84
Net Present Value (NPV) ............................................................................................................................... 85
A Word About Taxes
In application, the tax implications of real estate finance and real estate investment are
important. However, the scope of this workbook is limited and will not provide you adequate
information to fully understand the tax implications of buying, owning, and selling residential,
investment and/or commercial properties.
The examples and references in this book will be “tax neutral” meaning they make no
representation as to the tax implications of the decisions made. As a practitioner, you should
always consult a qualified tax advisor when working with clients.
Table of Contents
-- 7 --
(Page Purposely Left Blank)
WORKBOOK
Module I
Introductory
Notes:
Module I - Introductory
Chapter 1
The Basics
Please Note: Black icon with white lettering indicates a calculator key.
Power On
Power On: 
This key turns the calculator on, and the  key turns it off. If you
should accidentally forget to turn it off, the calculator will automatically
turn off after 8-12 minutes to save the batteries. The calculator uses
long-life batteries that can be changed per the directions in the User’s
Guide.
Clear
There are basically four ways to clear the calculator:
 pressed one
time clears the
display only.
 will clear
display and all
registries. Use
this if you want
to re-enter all
variables.
1. 
If the calculator is off, pressing this key turns the power on. If
the calculator is on, a single press of  clears everything on the
display, but leaves items stored in the critical financial keys
(loan amount, payment, term, interest, down payment, etc.)
2.  
Pressing  twice in succession clears the display and the
critical financial keys. It’s a good idea to press   whenever
you start a calculation, giving you a fresh start and avoiding the
possibility of carrying previous information erroneously into
your next calculation.
3. Backspace 
The backspace key is used to clear the last number entered, as
shown on the calculator display.
Chapter 1: The Basics
© 2004 Calculated Industries RE-8-3/04
-- 10 --
Notes:
Example:
Key in , and then press  followed by the number 9
key. Your display should read 1,509. The backspace key is
handy when you have made an error on your last entry
and you want to fix the entry without clearing out the entire
number and starting over.
4. Reset (also known as All-Clear) 
This function clears all entered values and restores the calculator
to its default factory settings. Use the reset/all-clear feature with
caution as it may eliminate unique items that you may have
entered for your local real estate market or mortgage parameters.
Second Functions
You’ll notice that some calculator functions are labeled directly on the
keys and other functions are labeled in small print above the keys. For
example:
FV

The items above the keys are known as the second function. To access
the second function, you must first press the  key then select the key
that has the second function you wish to use. Placing a second function
above a regular key allows the calculator to remain compact and easy to
carry.
Decimal Settings
Press  followed by any number  through  to set the number of
decimal places displayed on your calculator.
Please Note: The accuracy of the calculation is not affected by the change in decimal
display settings. Values round for display purposes only.
Decimal settings will remain until you again change the decimal place
setting. All-Clear, Reset, and loss of battery power will return the
display to the default setting of two decimal places.
For real estate finance, the most common setting is 2 decimals (0.00).
This setting is ideal for currency (i.e., dollars and cents). For
percentages and rates of return, set to 3 decimals to carry the answer to
three places past the decimal point, which is a standard in the financial
Qualifier Plus®
Training Program
Chapter 1: The Basics
-- 11 --
© 2004 Calculated Industries RE-8-3/04
Notes:
world.
You can reset decimals at anytime during a calculation without
interfering with the calculation or clearing your answer.

Example: Press  then the number . Then multiply  to
display the answer 100.00 (note two decimals). Then, press 
followed by the number  to display 100.0000 (note four
decimals).
Return the calculator to two decimals by pressing  followed by the
number .
Recall  Key
The  key is used to recall a number that has been previously stored
in a function key.

Example: Key in , then press . Then, put  into the 
key. As a result, 100,000 has been entered as a loan amount
and 7 has been entered as the interest rate. At any time, to
recall the amount previously entered as the loan amount, press
 and then . To display entered interest rate, press  and .
Triple-Zero  Key
Most real estate calculations involve large currency values, so, to save
time, the Qualifier Plus IIIx and Qualifier Plus IIIfx feature a special
Triple-Zero Key.


Example: To quickly enter , key in , followed by the 
key.

Chapter 1: The Basics
© 2004 Calculated Industries RE-8-3/04
-- 12 --
Notes:
Chapter 2
Date Math
Using the colon  key, you can solve for common real estate date
problems, including the expiration date of a listing or escrow closing
dates.
Example: Assume that today is April 26, 2004 and escrow
must close in 45 days. What is the final closing date?
Steps
Keys
Display
Clear Calculator
Enter Month
Enter Day
Enter Year
Add 45 Days





0.00
4.—
4 — 26 —
4 — 26 — 04
THU 06-10-04
(Thurs. June 10, 2004)
Date Math is a
fun exercise.
Try to figure
out how many
days until
your birthday,
a certain
holiday or an
anniversary.
The date math function also allows you to add or subtract dates or
number of days to arrive at a future or past date.
Example: How many days are there between October 15, 2004
and March 17, 2005?
Steps
Keys
Display
Clear Calculator
Enter Last Date
Subtract First Date
Find # of Days




0.00
3 — 17 — 05
10 — 15 — 04
153.00 (days)
Please Note: For date calculations, an entry of is assumed to be in the 1900s
(i.e. 1960), while an entry of is assumed to be in the 2000s (i.e. 2059).
Qualifier Plus®
Training Program
Chapter 2: Date Math
-- 13 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Practice Problems: Chapter 2
1. Today is September 17, 2004 and you must close your 1031
Exchange escrow in 180 days. What is the final closing date?
Answer: WED 03-16-05
2. Today is May 5, 2005 and your listing expires on August 11,
2005. How many days do you have left to find a buyer under
the existing listing?
Answer: 98 (days)
Please Note: Remember to subtract the oldest date from the newest date to
determine range between.
Chapter 2: Date Math
© 2004 Calculated Industries RE-8-3/04
-- 14 --
Notes:
Chapter 3
Overview of Financial Keys
Also known as Time Value of Money (TVM) or mortgage keys
A mortgage payment has four basic elements: Loan amount,
payment, interest, and term (number of payments). If you enter any
three of these elements, the Qualifier Plus IIIx and Qualifier Plus IIIfx
real estate finance calculators solve for the fourth unknown element.
It does not matter in which order you enter the known
information.
The Financial Keys are:
You can enter
any of the
three TVM
functions and
solve for the
fourth.
Loan Amount

Loan Amount, or Amount to be Borrowed
Payment

Payment per Period, Typically the Monthly Payment
Term

Annual Term, Typically 30 Years*
Interest

Annual Interest per Period
*Please Note: This calculator’s key operates with annual terms, to save time and
eliminate keystrokes. If you still prefer to enter periods (e.g., 360 periods rather than 30
years), you must use the periodic function (or ). It may be easier to remember
to enter values in annual terms, and that most residential loans are 30 years.
Qualifier Plus®
Training Program
Chapter 3: Overview of Financial Keys
-- 15 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 4
Sales Price, Down Payment and
Loan-to-Value (LTV)
Two additional financial variables used in mortgage loan calculations
and qualifying are sales price and down payment. To calculate the
desired home price and the buyer’s available/estimated down
payment, simply enter the two known variables (e.g., sales price,
down payment), and solve for the third (e.g., loan amount).
Please Note: You may enter an estimated down payment as a percent (e.g., 20%),
or dollars (e.g., $20,000). You do not need to label a percent using the  key. The
Qualifier Plus IIIx or Qualifier Plus IIIfx assumes you’re entering a percent if the
entered number is under 100.
These
calculators
are intuitive!
Whether
entering a
percentage
(%) or a dollar
($) amount,
the  key is
not needed.
The calculator will also compute the dollar amount of the down
payment if a percentage is entered. This is useful when a buyer
wants to know how much money they will actually need.
In addition, the calculator uses and requires the entry of a sales price
to calculate estimated property tax and property and hazard
insurance.

Example (Sales Price/Down Payment/Loan Amount): Find the
loan amount if the sales price is $425,000 and the buyer’s
down payment is 20%. Also find the dollar amount of the down
payment.
Steps
Keys
Display
Clear Calculator
Enter Sales Price
Enter Down Pmt %
Find Down Pmt $
Find Loan Amt





0.00
425,000.00
20.00 %
85,000.00
340,000.00
The Qualifier Plus IIIx and Qualifier Plus IIIfx also allow the entry of,
and calculate, loan-to-value (LTV).

Example (Finding LTV): Find the loan-to-value if the buyer is
putting $15,000 down on a $289,000 home.
Chapter 4: Price, Down and LTV
© 2004 Calculated Industries RE-8-3/04
-- 16 --
Notes:

Steps
Keys
Display
Clear Calculator
Enter Sales Price
Enter Down Pmt $
Find Down Pmt %
Find LTV
Find Loan Amt






0.00
289,000.00
15,000.00
5.19 %
LTV 94.81 %
274,000.00
Example (Entering LTV): Find the loan-to-value if the buyer
needs to borrow 80% for a $375,000 home.
Steps
Keys
Display
Clear Calculator
Enter Sales Price
Enter LTV
Find Down Pmt $
Find Loan Amt
Find Down Pmt %






0.00
375,000.00
LTV 80.00 %
75,000.00
300,000.00
20.00 %
Practice Problems: Chapter 4
1. Find the dollar amount of the down payment required if your
buyer wants to put 20% down and the sales price of the home is
$345,900.
Answer: $69,180.00
2. What is the down payment percentage and LTV if the sales price
of the home is $583,000 and the down payment is $35,000?
Answers: 6% down payment; 94% LTV
Qualifier Plus®
Training Program
Chapter 4: Price, Down and LTV
-- 17 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 5
Calculating Payments
The Qualifier Plus IIIx or Qualifier Plus IIIfx calculator can compute
any type of loan payment. It does not matter if the payment is monthly,
bi-weekly, or quarterly. However, since most real estate loans are
repaid on a monthly basis, your calculator is automatically preset
(default) for monthly payments (or 12 payments/year). In addition, the
calculator has a special function for bi-weekly payments, which will be
covered in an upcoming section of this course. Refer to your User’s
Guide to see how to reset your calculator for annual or quarterly
payments.
Monthly (P&I) Payment
Please Note: It’s a good idea to clear the calculator by pressing  whenever you
start a calculation, giving you a fresh start and avoiding the possibility of carrying
previous information erroneously into your next calculation.

Example: What is the monthly (principal and interest) payment
for a $200,000 loan at 8% interest for a term of 30 years?
Remember, it does not matter in which order you enter the
information. The calculator will solve for the missing variable.
Steps
Keys
Display
Clear Calculator
Enter Loan Amt
Enter Term
Enter Interest
Find Payment

* 



0.00
200,000.00
30.00
8.00 %
P+I 1,467.53
* Please Note: You can use the  key to save keystrokes.
Chapter 5: Calculating Payments
© 2004 Calculated Industries RE-8-3/04
-- 18 --
Notes:
PITI and Total Payment
When a lender checks to see if a borrower is qualified for a loan, the
lender frequently uses a payment consisting of monthly principal,
interest, property taxes, hazard insurance and, if needed, Private
mortgage insurance (PMI). This is referred to as a monthly principal,
interest, tax and insurance payment, or PITI.
This calculation is important to estimate and demonstrate what a buyer’s
actual payment will be (i.e., more than the principal and interest
payment).
To compute the PITI payment, the Qualifier Plus IIIx or Qualifier Plus
IIIfx uses the entered property tax, hazard insurance, and mortgage
insurance (PMI) using three keys/functions:, , and a second function of
(mortgage insurance). Tax and insurance values can be entered as
estimated percentages or dollar amounts.
Please Note: You may enter an estimated tax, insurance or mortgage insurance
values as a percent (e.g., 2%), or dollars (e.g., $1,000), or any combination of either.
You do not need to label a percent using the  key. The Qualifier Plus IIIx or Qualifier
Plus IIIfx assumes you’re entering a percent if the entered number is under 100.
It is important that sales price  be included in these calculations, as property taxes
and hazard insurance are based on sales price, not on the loan amount. Mortgage
insurance is, of course, based on loan amount.
Once loan variables and sales price or down payment are entered (as
tax and hazard insurance values are based on sales price), the  key is
multi-functional. It computes four different types of payments with each
successive press. The first press (as seen in the previous section)
computes the P&I payment, the second press displays the PITI
payment, the third press shows the total payment, and the fourth press
calculates the interest-only portion. Successive presses after this will
cycle through and eventually revolve back to the first solution (P&I
payment).
Example (PITI Payment): The sales price for a home is
$225,000 and a buyer will put 5% down and obtain a 95% loan at
6.25%, amortized for 30 years. The annual property tax runs
1.25% of the sales price and the annual hazard insurance is
$800. Because the buyer is putting less than 20% down, the
lender requires monthly PMI at a rate of 0.50%. What is the
monthly PITI payment?
Qualifier Plus®
Training Program
Chapter 5: Calculating Payments
-- 19 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Remember, is does not matter in which order you enter the
information. The calculator will solve for the missing variable.
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
, , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Steps
Keys
Display
Clear Calculator
Enter Term
Enter Interest
Enter Sales Price
Enter Down Pmt %
Enter Tax*
Enter Insurance*
Enter Mortgage Ins*








0.00
30.00
6.25 %
225,000.00
5.00 %
1.25 %
800.00
0.50 %
Please Note: Shift selects the mortgage insurance function that is the second
function labeled above the regular key.
Find Loan Amount
Find P&I Payment
Find PITI Payment



213,750.00
P+I 1,316.10
PITI 1,706.20
Do Not Clear Calculator
In the event that the buyer will be paying Homeowner’s Association
dues, it’s helpful to calculate a more accurate total payment for your
prospective homebuyer.

Example (Total Payment): Add estimated Homeowner’s
Association dues of $80 per month to the above example and
find the total payment (PITI plus monthly dues).
Steps
Keys
Display
Enter HA Dues
Find Total Pmt


80.00
TTL 1,786.20
Please Note: Sometimes a buyer will want to know how much of the monthly
payment will be paid to interest (vs. principal), or the buyer may be looking at an
interest-only loan. See Chapter 9 in Module II (Comprehensive Course) for details.
© 2004 Calculated Industries RE-8-3/04
Chapter 5: Calculating Payments
-- 20 --
Notes:
Paying Off a Loan Early
(Making Additional Payments to Principal)
How fast will a loan be paid off if larger monthly payments are made?
Example: What is the monthly payment for a $250,000 loan at
7%, amortized for 30 years?
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Find P&I Payment





0.00
250,000.00
7.00 %
30.00
P+I 1,663.26
It will take $1,663.26 per month for 360 months (30 years x 12
payments per year) to pay off this loan. But, if the borrower
rounded up to make payments of $1,700 per month, how long
would it take to pay off this loan?
Do Not Clear Calculator
Steps
Keys
Display
Enter New Payment
Find New Term


1,700.00
27.95 (years)
What if the borrower paid even more… perhaps $2,000 per
month?
Steps
Keys
Display
Add to Payment
Find New Term


2,000.00
18.72 (years)
Adding to your
payments will
assist in
lowering your
term and
lowering the
interest paid.
This loan will be paid off in almost 19 years, versus 30!
Please Note: The term is reduced because the extra payments are applied to
principal. Lenders will allow larger payments as long as they do not violate any
prepayment provisions in the promissory note.
Qualifier Plus®
Training Program
Chapter 5: Calculating Payments
-- 21 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Practice Problems: Chapter 5
What is the monthly P&I payment for a $175,000 loan at 6.5% for 30
years?
Answer: $1,106.12
What is the monthly P&I payment for a $710,000 loan at 7.75% for 30
years?
Answer: $5,086.53
What is the monthly P&I payment for a $35,000 seller-carry second
loan at 8.25% for 5 years?
Answer: $713.87
The purchase price of the home is $1,300,000. The buyer will put
30% down and obtain a 70% loan at 6.75%, amortized for 30 years.
The annual property taxes run 2% of the price and the annual hazard
insurance will be approximately $7,000. What is the monthly PITI
payment?
Answer: $8,652.24
What is the monthly payment for a $125,000 loan at 7.75% for 30
years? How long would it take to pay off the loan if the borrower paid
$1,000 per month?
Answer: $895.52; 21.31 (years)
What is the monthly payment for a $375,000 loan at 8.25% for 30
years? How long would it take to pay off the loan if the borrower paid
$3,000 per month?
Answer: $2,817.25; 23.86 (years)
© 2004 Calculated Industries RE-8-3/04
Chapter 5: Calculating Payments
-- 22 --
Notes:
Chapter 6
Amortization
For income tax purposes, a borrower often wants and needs to know
how much they have paid to interest and to principal, the remaining loan
balance after so many years, and an estimated mortgage interest
deduction. The Qualifier Plus IIIx or Qualifier Plus IIIfx calculator easily
does this using the  key (amortization). The  function calculates
principal and interest allocation and estimated mortgage interest
deduction, as well as amortization and term.
Simple Amortization
For 1st Payment or Any Individual Payment
Example: What is the monthly payment for a $100,000 loan at
8%, amortized for 30 years? How much of the first payment is
interest? principal? What is the remaining loan balance?
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Find P&I Payment
Set Payment Range
Find Total Interest
Find Total Principal
Find Total Int & Prin
Find Remaining Bal
Find Remaining Term











0.00
100,000.00
8.00 %
30.00
P+I 733.76
AMRT 1-1
666.67
67.10
733.76
99,932.90
29.92
Amortization and Mortgage Interest Deduction
A more popular request is to find the estimated mortgage interest
deduction for the 1st year to see how much a mortgage will help lower
income taxes. The mortgage interest deduction is computed on the sixth
press of  after entering the amortization period, and is based on a 28%
tax bracket, unless you’ve customized the bracket using .
Qualifier Plus®
Training Program
Chapter 6: Amortization
-- 23 --
© 2004 Calculated Industries RE-8-3/04
Notes:

To amortize
a specific
range of
years (e.g.
1 – 3 years),
enter
.
Subsequent
presses of 
will amortize
the total of
years 1
through 3.
Example: What is the monthly payment for a $100,000 loan at
8% amortized for 30 years? What is the interest paid after
making 12 monthly payments (1st year)? What is the principal
paid for the 1st year? Total principal and interest? What is the
remaining loan balance and term? What is the estimated
annual income tax deduction for mortgage interest (based on
28% tax bracket)?
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Find P&I Payment





0.00
100,000.00
8.00 %
30.00
P+I 733.76
Now, amortize for the 1st year or period:
Set Payment Range
Find Total Interest
Find Total Principal
Find Total Int & Prin
Find Remaining Bal
Find Remaining Term
Find Tax Ded (28%)







1-12
7,969.81
835.36
8,805.17
99,164.64
29.00
2,231.55
Now, amortize for the 2nd year or period:
Set Range (2nd Year)
Find Total Interest
Find Total Principal
Find Total Int & Prin
Find Remaining Bal
Find Remaining Term
Find Tax Ded (28%)







13-24
7,900.48
904.70
8,805.17
98,259.94
28.00
2,212.13
Now, amortize for the 3rd year or period *:
Set Range (3rd Year)

25-36
*Please Note: Repeated presses of the  key will automatically move to the next
year, calculating the same sequence for every year for the life of the loan.
To find the mortgage interest income tax deduction for tax brackets other than 28%,
enter the new bracket into the  second function (e.g., for 30%, enter  , then
calculate as shown.)
Chapter 6: Amortization
© 2004 Calculated Industries RE-8-3/04
-- 24 --
Notes:
Practice Problems: Chapter 6
1. What is the monthly payment for a $125,000 loan at 8% for 30 years?
What is the first month’s interest? What is the principal? Total interest
plus principal? What is the remaining loan balance and term?
Answers: $917.21; $833.33; $83.87; $917.21; $124,916.13; 29.92
(years)
2. What is the monthly payment for a $15,000 2nd loan at 9%, amortized for
5 years? After 12 payments (1 year) what is the interest paid? Principal
paid? Remaining loan balance?
Answers: $311.38; $1,249.05; $2,487.45; $12,512.55
3. What is the monthly payment for a $230,000 loan at 6.5% for 30 years?
What is the interest paid for the first year? What is the principal paid?
Total principal and interest? What is the remaining loan balance and
term? What is the estimated annual income tax deduction for mortgage
interest (based on a 28% tax bracket)?
Answers: $1,453.76; $14,874.31; $2,570.77; $17,445.08; $227,429.23;
29 (years); $4,164.81
4. What is the estimated mortgage interest income tax deduction for the
1st year for a $375,000 loan, at 7% interest for a 30-year term, based on
a 30% tax bracket? (Remember to enter  for 30% tax bracket
before completing problem.)
Answer: $7,838.80
Qualifier Plus®
Training Program
Chapter 6: Amortization
-- 26 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 7
Qualifying
In addition to providing quick and accurate payment and amortization
solutions, the Qualifier Plus IIIx or Qualifier Plus IIIfx helps real estate
finance professionals quickly pre-qualify home buyers. Whether a real
estate agent or a mortgage lender, the QPIIIx allows you to quickly prequalify so that you can focus the buyer’s attention on homes that fall within
their affordable price range. In other words, this calculator saves both the
agent’s and buyer’s time and effort in the house-hunting process.
The Qualifier Plus IIIx or Qualifier Plus IIIfx have two qualifying ratio keys:
and .
Press  and it displays 28.00-36.00 (default). As a rule, this is the standard
conventional conforming ratio. The total monthly housing payment of
principal, interest, taxes, hazard insurance, PMI and homeowner dues, if
any, should not exceed 28% of the borrower’s gross monthly income.
Then, the total monthly housing payment is added the borrower’s longterm monthly debts and the sum of the two should not exceed 36% of the
borrower’s gross monthly income.
Press  and it displays 29.00-41.00 (default), which represents the more
generous ratio typically found on government-backed loans, such as FHA
and VA.
Please Note: Examples of the use of the  key and custom ratios are included in Chapter
8 of Module II (Comprehensive Course).
For the purposes of this course, we will use these standard default ratios to
illustrate how helpful the  and  keys are for qualifying homebuyers.
Please Note: You can change and store any ratio you want into the  or  keys to meet
the requirements of your local lenders. Please refer to the User’s Guide, or contact your
instructor to inquire about additional courses that may be available.
Chapter 7: Qualifying
© 2004 Calculated Industries RE-8-3/04
-- 27 --
Notes:
Qualifying
Finding Qualifying Loan Amount, Sales Price & Estimated PITI Payment
It is often productive for a real estate or mortgage professional to enter the
buyer’s annual income and monthly debt to quickly determine the price range
of homes, the buyer is qualified to purchase. This saves time so the agent or
broker can focus the buyer on homes in a realistic price range or provide
alternate financing options.
Besides entering the loan parameters, the buyer’s annual income, monthly
long-term debt, and available down payment, you can also enter an estimated
annual property tax*, annual property and hazard insurance* and annual
mortgage insurance* (entered as estimated percents or dollar amounts into the
,  or  keys). Entering this data provides more accurate pre-qualifying and
PITI. The calculator also accepts monthly Homeowner’s Association dues or
other expenses using the  key to calculate a total payment.
Example: First-time buyer(s) have a combined annual income of
$60,000 and a long-term monthly debt of $400. They have $5,000 for a
down payment. They are looking at a loan at 5%, amortized for 30
years, assuming they meet the lender’s credit requirements. Property
taxes run 1.25%, hazard insurance is 0.5% and PMI is 0.6%.
Homeowner’s Association dues are estimated at $40 per month. What
loan amount and price range of homes do the buyer(s) appear to qualify
for? What is the estimated total monthly payment?
Steps
Keys
Display
Clear Calculator
Enter Annual Income
Enter Monthly Debt
Enter Down Payment
Enter Interest
Enter Term
Enter Tax*
Enter Insurance*
Enter Mortgage Ins*
Enter HA Dues
Display Qual 1 Ratios
Find Qual Loan Amt
Find Price w/ Down
Find Total Payment














0.00
60,000.00
400.00
5,000.00
5.00 %
30.00
1.25 %
0.50 %
0.60 %
40.00
28.00-36.00
184,631.02
189,631.02
TTL 1,400.00
Qualifier Plus®
Training Program
Chapter 7: Qualifying
-- 28 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Do Not Clear Calculator

But, what if their income increased to $75,000 and they also increased
their down payment to 10%?
Steps
Keys
Display
Enter New Income
Enter New Down Pmt
Display Qual 1 Ratios
Find Qual Loan Amt
Find Price w/ Down
Find Total Payment






75,000.00
10,000.00
28.00-36.00
231,407.25
241,407.25
TTL 1,750.00
Do Not Clear Calculator

If you are
using a
Qualifier Plus
IIIfx, you will
need to press
, , and/or
If they put 20% down instead of only $10,000, and eliminated
mortgage insurance, what could they qualify for? How much money
will be required for the down payment to equal 20%?
Steps
Keys
Display
Enter New Down Pmt
Delete Mortgage Ins*
Display Qual 1 Ratios
Find Qual Loan Amt
Find Price w/ Down
Display Down Pmt %
Display Down Pmt $
Find Total Payment








20.00 %
0.00
28.00-36.00
237,792.85
297,241.06
20.00 %
59,448.21
TTL 1,750.00
Please Note: Larger amount as down payment results in larger qualifying loan amount.
With the omission of mortgage insurance, the total payment remains the same as previous
example.

to enter tax,
insurance
and/or
mortgage
insurance.
Chapter 7: Qualifying
© 2004 Calculated Industries RE-8-3/04
-- 29 --
Notes:
Practice Problems: Chapter 7
1. Buyer(s) have a combined annual income of $95,000 and long-term
monthly debt of $500. They have $20,000 for a down payment. A loan is
available at 6.75% amortized for 30 years. property taxes run 1.25%,
hazard insurance .5% and PMI is 0.6%. What loan amount and price
range of homes do the buyer(s) appear to qualify for?
Answers: $259,050.05; $279,050.05 (maximum price)
Qualifier Plus®
Training Program
Chapter 7: Qualifying
-- 30 --
© 2004 Calculated Industries RE-8-3/04
(Page Purposely Left Blank)
WORKBOOK
Module II
Comprehensive
A Word About Taxes
In application, the tax implications of real estate finance and real estate investment are
important. However, the scope of this workbook is limited and will not provide you adequate
information to fully understand the tax implications of buying, owning, and selling residential,
investment and/or commercial properties.
The examples and references in this book will be “tax neutral” meaning they make no
representation as to the tax implications of the decisions made. As a practitioner, you should
always consult a qualified tax advisor when working with clients.
Notes:
Module II - Comprehensive
Chapter 8
Advanced Qualifying
Qualifying with Various Ratios
Use the Qualifier Plus IIIx or Qualifier Plus IIIfx’s  key for less stringent
qualifying (i.e., to show your buyer greater qualifying loan amounts using 29:41
ratios vs. 28:36). Or, enter custom ratios by overriding the existing ratios in the
 or  keys.
Example: First-time buyer(s) have combined annual income of $60,000
and long-term monthly debts of $400. They have $5,000 for a down
payment. An ARM loan at a start rate of 5% amortized for 30 years is
available if the buyer(s) meet the lender’s credit requirements. Property
taxes run 1.25%, hazard insurance at 0.5% and PMI of 0.6%.
Homeowner’s association dues are estimated at $40 per month. What
loan amount and price range of homes do the buyer(s) appear to qualify
for at 28:36 and 29:41?
Steps
Keys
Display
Clear Calculator
Enter Income
Enter Debt
Enter Down Payment
Enter Interest
Enter Term
Enter Tax*
Enter Insurance*
Enter Mortgage Ins*
Enter Assoc Dues
Display Qual 1 Ratios











0.00
60,000.00
400.00
5,000.00
5.00 %
30.00
1.25 %
0.50 %
0.60 %
40.00
28.00-36.00
Qualifier Plus®
Training Program
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Chapter 8: Advanced Qualifying
-- 34 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Find Qual Loan Amt
Display Price w/ Down
Display Qual 2 Ratios
Find Qual Loan Amt
Display Price w/ Down





184,631.02
189,631.02
29.00-41.00
191,455.52
196,455.52
Do Not Clear Calculator

Now, use the same buyer information as above, but enter/store new
ratios of 33% income/43% debt into the  key.
Steps
Keys
Display
Enter Custom Ratios
Find Qual Loan Amt
Display Price w/ Down
Reset Qual 2 Ratios



**
33.00-43.00
218,753.50*
223,753.50
29.00-41.00
*The maximum loan amount is about $34,000 more with the more flexible ratios vs. the
standard 28:36.
**As a last step, return the  ratios back to 29:41
Qualifying by Income-Needed
Finding Income Needed to Qualify

Many
lenders offer
aggressive
ratios (e.g.
33 to 43) to
increase
buying power.
Example: A buyer is interested in a home that is listed for $275,000.
The buyer will put 20% down and obtain an 80% loan at 7% amortized
for 30 years. The buyer has long-term monthly debts of $500.
Property taxes run 1.25% of the sales price and hazard insurance will
cost $800 per year. What is the gross annual income required to buy
this home?


Remember, it does not matter in which order you enter the
information.
Steps
Keys
Display
Clear Calculator
Enter Sales Price
Enter Down Payment
Enter Interest
Enter Term





0.00
275,000.00
20.00 %
7.00 %
30.00
Chapter 8: Advanced Qualifying
© 2004 Calculated Industries RE-8-3/04
-- 35 --
Notes:
Enter Debt
Enter Tax*
Enter Insurance*
Display Ratios
Find Income Needed





500.00
1.25 %
800.00
28.00-36.00
77,862.45
Please Note: To find the monthly income needed to qualify: $77,862.45 ÷ 12 months =
$6,488.54.
Qualifier Plus®
Training Program
Chapter 8: Advanced Qualifying
-- 36 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Practice Problems: Chapter 8
1. A couple’s combined income is $110,000 and their monthly debt is
$500. They are interested in purchasing a home. They can put 20%
down. Current rates average 6.5% for 30-year fixed-rate mortgages.
Property taxes are 1.25% and hazard insurance is $650 per year. Do
they qualify for this home using 28:36 ratios? What about 29:41
ratios?
Answers:
At 28:36, they qualify for a $329,604.87 loan and the home price is
$412,006.09. They can look at homes at or below $412,000. At 29:41
ratios, they qualify for a $341,630.26 loan and a $427,037.82 home.
Do Not Clear Calculator
2. Using above example, enter new ratios of 33:40 into the  key and
resolve for qualifying amount and price.
Answers: 389,731.80; $487,164.74
Please Note: Before continuing, return the  ratios back to 29:41.
3. A buyer is interested in a home that is listed for $400,000. The buyer will
put 20% down and obtain a loan at 6.5% amortized for 30 years. The
buyer has long-term monthly debts of $1,000. Property taxes are 1.25%
of the sales price and hazard insurance will cost $1,200 per year. What
is the gross annual income required to buy this home (using 28:36 
ratios)?
Answer: 117,976.14
4. A buyer is interested in a home for $700,000 with 20% down at 7% for 30
years. The buyer(s) has monthly debt of $1,500. Property taxes run 1.5%
and insurance is 0.5%. What is the annual income required to buy this
home (using 28:36  ratios)?
Answer: 213,078.69
Please Note: Before continuing, clear all registers and return calculator to default settings by
pressing .
Chapter 8: Advanced Qualifying
© 2004 Calculated Industries RE-8-3/04
-- 37 --
Notes:
Chapter 9
Payment Options
Bi-Weekly Loan
Occasionally, instead of monthly payments, some real estate borrowers are
given the option of making bi-weekly loan payments. Bi-weekly means a
monthly payment divided by two and paid every two weeks, instead of once a
month. Many times this option better meets the borrower’s needs, if, for
example, they are paid by their employer every two weeks.
A payment every two weeks is equal to approximately 26 payments per year,
instead of the usual 12 monthly payments. This extra payment pays the loan
off faster than a standard monthly loan. Making bi-weekly loan payments can
significantly save on interest paid and reduce the time it takes to pay off a loan.
The Qualifier Plus IIIx calculator can easily compute bi-weekly payments and
illustrates the excellent savings of bi-weekly loans.
Example: Calculate the monthly payment for a $200,000 loan at 7%
interest with a 30-year term. Then, convert it to a bi-weekly payment and
find out how many years will it take to pay off the loan, the total interest
savings, the total interest and principal paid and the bi-weekly payment.
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Find P&I Payment
Convert to Bi-Weekly






0.00
200,000.00
7.00 %
30.00
1,330.60
23.71*
*Making a bi-weekly payment will pay off the loan in 23.71 years, compared to 30 years for
monthly payment.
Find Total Int Savings
Find Bi-Wkly Int Svgs
Display Loan Amount
Total Int & Principal
Find Bi-Weekly Pmt





Qualifier Plus®
Training Program
68,925.50
210,092.30
200,000
410,092.30
665.30
(continued…)
Chapter 9: Payment Options
-- 38 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Clear Bi-Weekly Info
 *
0.00
*Pressing  only once will clear the display, but the calculator will remain in bi-weekly mode
(i.e. 26 payments per year) until  is pressed twice in succession.
Adjustable Rate Mortgage (ARM)
When figuring
a fullyamortized
ARM, the
calculator
displays the
worst-case
scenario after
the initial fixedrate term has
expired. For
example, the
first adjustable
payment
shown for a
5-1 ARM will
be the
payment for
the sixth year.
Sometimes an adjustable rate mortgage ARM loan is a good option for
buyers who can benefit from low introductory interest rates. However, it’s
good to show the buyer a worst-case scenario when the ARM interest rate
will increase. The Qualifier Plus IIIx and Qualifier Plus IIIfx handle ARM loans
with ease.
With ARMs, you must enter an interest:term adjustment (the percentage the
interest rate can increase each year) using the  key. You also enter a lifetime
cap before completing the problems.

Example: A $275,000 loan with a starting rate of 3.95%, amortized
for 30 years, will have an initial payment of $1,304.98. Calculate as
follows:
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Start Rate
Enter Term
Find 1st Year P&I Pmt





0.00
275,000.00
3.95 %
30.00
1,304.98
Do Not Clear Calculator

Assume that after each year, the lender can increase the interest rate
1/2% per year to a cap of 5%. What will the new ARM payment be
each year? When will the payment increase meet its maximum cap?


Enter the lifetime cap and the interest rate increase of 1/2% per year
by separating the interest increase from the year with the colon key
(i.e. interest adjustment  term adjustment.)

Steps
Keys
Chapter 9: Payment Options
© 2004 Calculated Industries RE-8-3/04
-- 39 --
Display
Notes:
Set Cap Percentage
Set Annual Increase
Find 1st ARM Pmt
Find 2nd ARM Pmt
Find 3rd ARM Pmt
Find 4th ARM Pmt
Find 5th ARM Pmt
Find 6th ARM Pmt
Find 7th ARM Pmt
Find 8th ARM Pmt
Find 9th ARM Pmt
Find 10th ARM Pmt












5.00 %
0.50-1.00
1,383.13
1,461.47
1,539.81
1,617.97
1,695.78
1,773.07
1,849.70
1,925.49
2,000.31
2,074.00*
*This is the maximum increase adjustment. When the maximum increase is reached, an “M”
will display for “maximum”. Since the cap has been reached, subsequent ARM payments will
be the same.
Example (Worst-Case Scenario –1% Increase Each Year): Use same
loan as above: $275,000 loan with a starting rate of 3.95%, amortized
for 30 years; lifetime cap of 5%. Calculate as follows:
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Start Rate
Enter Term
Find 1st Year Pmt





0.00
275,000.00
3.95 %
30.00
1,304.98
Do Not Clear Calculator
As a worst-case scenario, what if the rate increases 1% after the end of
each year? Then, figure the ARM payments.
Steps
Keys
Display
Set Annual Increase
Find 1st ARM Pmt
Find 2nd ARM Pmt
Find 3rd ARM Pmt
Find 4th ARM Pmt
Find 5th ARM Pmt






1.00-1.00
1,463.58
1,626.79
1,793.67
1,963.41
2,135.26*
Qualifier Plus®
Training Program
Chapter 9: Payment Options
-- 40 --
© 2004 Calculated Industries RE-8-3/04
Notes:
*This is the maximum increase adjustment. When the maximum increase is reached, an “M”
will display for “maximum”. Since the cap has been reached, subsequent ARM payments will
be the same.
Display 6th Year Prin 
Display 6th Year Int

Show Remaining Term 
255,483.10
8.95%*
25.00
*3.95% initial rate, plus 5% cap limit.
Low-Start Payment / Negative Amortization:
In addition to ARMs, there are often other low-payment options available to
buyers who qualify and are interested in obtaining the lowest payment
possible. You can present very rough low-payment, or “cash flow” type loan
scenarios using the Qualifier Plus IIIx.
Of course, the mortgage lender will provide details on various loan programs.
But it’s good to show your clients that they have various choices.
One option is to finance using an extremely low start payment loan, or
negative amortization/deferred interest. This is usually a good option if they
want to pay the smallest payment possible over the short term (or will
refinance or sell after a few years), as they will be paying a lot more for the
loan in the long run. However, some people really like the idea of using the
low payment savings to invest or pay off debt.

Example: As a rough example of a negative amortization payment,
find the extremely low monthly payment on a $250,000 loan with a
start rate of only 1.95%. Then, recalculate the payment if the actual
rate increased to 6%, to show them how much their payment could
increase.
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Start Rate
Enter Term
Find Initial Payment
Enter Actual Rate






0.00
250,000.00
1.95 %
30.00
917.81
6.00 %
Chapter 9: Payment Options
© 2004 Calculated Industries RE-8-3/04
-- 41 --
Notes:
Find Standard Pmt

1,498.88
Interest-Only Payment
Another option is an interest-only loan. Again, this is a good option if they want
to pay the smallest payment possible for a short term, as they will be paying a
lot more for the loan in the long run.
Example: Find the initial low monthly payment on a $250,000 loan with
an interest-only rate of 6.5%.
Steps
Keys
Display
Reset / Clear All
Enter Loan Amount
Enter Interest
Enter Term
Find P&I Payment
Find Total Payment
Find Interest-Only Pmt







0.00
250,000.00
6.50 %
30.00
1,580.17
1,580.17
1,354.17
30- vs. 15-Year Loan
You can also show your clients the difference in monthly payments for 30- and
15-year loans, as the latter would result in significant interest savings.
Example: Find the payment for a 30-year, $375,000 mortgage
at 7%. Then find the payment for a 15-year mortgage.
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Find 30-Year P&I Pmt
Find Total Interest






0.00
375,000.00
7.00 %
30.00
2,494.88
523,158.37
Qualifier Plus®
Training Program
Many people
will chose a
30-year loan
and make a
15-year
payment.
Doing so offers
the buyer the
flexibility of
returning to the
30-year
payment if
needed.
Chapter 9: Payment Options
-- 42 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Now, reset the term.
Enter New Term

Find 15-Year P&I Pmt 
Find Total Interest


Although monthly payment is higher, the buyer will save over
$290,000!
Chapter 9: Payment Options
© 2004 Calculated Industries RE-8-3/04
15.00
3,370.61
231,709.08*
-- 43 --
Notes:
Practice Problems: Chapter 9
1. What is the monthly payment for a 300,000 loan at 5.75% interest with a
30-year term? Convert the loan to a bi-weekly and find out how many
years will it take to pay off the loan, the total interest savings, the total
interest and principal paid and the bi-weekly payment.
Answers: $1,750.72; 24.70 (years); $68,162.89; $262,095.80;
$300,000; $562,095.80; $875.36
2. Consider an ARM loan of $350,000, 2.95%, 30 years. If the ARM
payments increase 1% per year, find the 1st year and adjusted ARM
payments, until the lifetime cap of 5% is reached.
Answers: $1,466.19; $1,655.32; $1,850.97; $2,051.89; $2,256.96;
$2,465.19 (max)
3. Find the low monthly payment on a $175,000, 30-year negatively
amortized mortgage at a low rate of 2%.
Answer: $646.83
4. Compare the monthly P&I payments and total interest paid for a 15- and
30-term mortgage, if the loan amount is $325,000 and interest rate
6.88%.
Answers: $2,899.43 (15-year payment with $196,897.65 total interest
paid); $2,136.10 (30-year payment with $443,997.64 total interest paid
Please Note: Before continuing, clear all registers and return calculator to default settings by
pressing .
Qualifier Plus®
Training Program
Chapter 9: Payment Options
-- 44 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 10
Annual Percentage Rate (APR)
Although the annual percentage rate (APR) of a loan must be disclosed by
the lender, the Qualifier Plus IIIx can provide an estimate of the total cost of a
loan, including points / fees and mortgage insurance when applicable. This
handy calculation will allow you to give clients an idea of what they will
actually pay, letting them compare various loan options and offerings.
To do this, first ‘set up’ the loan by entering the variables. Then, add points
and fees and press  (second function is APR) to solve for the APR. If you
pressa second time, the calculator will display the total finance charges,
and a third press will display total finance charges plus principal (total cost of
the loan).
If mortgage insurance* () is entered, the Qualifier Plus IIIx will also include
that expense into the APR, as well as calculate the periodic mortgage
insurance dollar amount and PIMI (principal, interest, mtg. ins.) payment.
Please Note: APR for non-real estate loans (such as for autos and boats) that compound
interest based upon 365 days per year cannot not be solved using this function, as
calculations are based on 360 days per year.
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Chapter 10: APR
© 2004 Calculated Industries RE-8-3/04
-- 45 --
Notes:
Example: A buyer is qualified for a $350,000 mortgage. The 30-year
fixed-rate loans are averaging 6.5%. The buyer is putting less than 20%
down and will pay mortgage insurance of 0.75%. If you figure the loan
will cost 1.5 points plus $750 in fees, what is the APR (including
mortgage insurance)?
And, what are the total finance charges, principal amount financed, total
cost, P&I payment, monthly mortgage insurance, and PIMI payment?
Steps
Keys
Display
Clear Calculator
Enter Loan Amount
Enter Term
Enter Interest
Solve for Payment
Enter Mortgage Ins*






0.00
350,000.00
30.00
6.50 %
2,212.24
0.75 %



350,000.00
5,250.00
6,000.00
Calculate APR

7.61 (APR%)*
Find TTL Fin Charges
Display Prin Financed
Find Total Cost
Find P&I Payment
Find Monthly Mtg Ins*
Find PIMI Payment






531,155.71**
344,000.00
875,155.71
2,212.24
218.75
2,430.99***
Calculate Points and Fees:
Recall Loan Amount
Calculate Points
Add Fees
Find APR:
*APR includes mortgage insurance, if entered. Total finance charges include mortgage
insurance over the life of the loan, to present a worst-case scenario; however, most people can
eliminate MI once a certain LTV is met.
**Total finance charge includes mortgage insurance*, points / fees and total interest paid.
***Payment includes estimated monthly mortgage insurance.
Qualifier Plus®
Training Program
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Chapter 10: APR
-- 46 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Practice Problems: Chapter 10
1. What is the APR for a $376,000 loan at 6.75% for a 30 term with1.5
points, $750 in fees and $2,000 estimated annual mortgage
insurance?
Answer: 7.58%
2. What is the APR for a $376,000 loan at 6.75% for a 30 term with 1.5
points and $750 in fees?
Please Note: In this example, solve for APR with no mortgage insurance.
Answer: 6.92%
Chapter 10: APR
© 2004 Calculated Industries RE-8-3/04
-- 47 --
Notes:
Chapter 11
Remaining Balance / Balloon Payment
Remaining balance is also called balloon payment and outstanding loan
balance. To solve for the balance on a loan after a series of payments, first ‘set
up’ the loan as usual by entering , , , and solve for the P&I payment .
Then enter the year the loan is due, and press   (second function is ‘Bal’) to
solve for the remaining balance. It’s simple!
Example: $200,000 loan at 6.5% is amortized for 30 years, but due in 5
years. What is balance after 5 years?
Steps
Keys
Display
Enter Loan Amount
Enter Interest
Enter Term
Find P&I Payment




200,000.00
6.50 %
30.00
1,264.14
Solve for the loan balance in 5 years, as follows:
Enter Payoff Year

187,221.95
Do Not Clear Calculator
You can also solve for any remaining balance / balloon payment payoff
by entering the new payoff year and resolving.
Steps
Keys
Display
Enter Payoff Year

169,552.25
Please Note: The remaining loan balances above assume that the borrower has already made
the last monthly payment. If this is not so, then the last monthly payment must be added to the
balance to get the total remaining balance / balloon payment.
Qualifier Plus®
Training Program
Chapter 11: Balances / Balloons
-- 48 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Practice Problems: Chapter 11
1. What is the balance after 5 years (60 payments) for a $450,000 loan
at 6.25% amortized for 30 years, due in 5 years?
Answer: $420,017.59
2. What is the loan balance of a $40,000 seller-carry 2nd at 11%
amortized for 30 years, due in 7 years?
Answer: $38,207.25
Chapter 11: Balances / Balloons
© 2004 Calculated Industries RE-8-3/04
-- 49 --
Notes:
Chapter 12
Estimated Tax Savings
Home ownership offers significant tax benefits. Buyers will no doubt want to
know the estimated annual income tax savings that purchasing a home will
offer. The easy-to-use tax savings function of the Qualifier Plus IIIx makes
home ownership seem more affordable, which is an important ‘selling’ feature.
Please Note: This is an estimate only; you should always inform your clients they should
consult their tax advisor for customized tax analysis.
The tax savings function is a second function of the  key. The estimated
annual property tax, property / hazard insurance and buyer’s tax bracket are
subtracted from the PITI payment to determine the net, after-tax payment.
Example: A buyer is willing to put 20% down on a $375,000 home and
is in the 30% tax bracket. Fixed-rate loans average 6.75% for a 30-year
term, annual property taxes are $4,000 and hazard insurance is $600.
What is the estimated annual income tax savings and after-tax
payment?
Steps
Keys
Display
Clear Calculator
Enter Term
Enter Interest
Enter Sale Price
Enter Down Payment
Find Loan Amount
Enter Property Tax*
Enter Insurance*
Find P&I Payment
Find PITI Payment
Enter Tax Bracket
Find Annual Tax Svgs
Find Monthly Tax Svgs
Find After-Tax Pmt














0.00
30.00
6.75 %
375,000.00
20.00 %
300,000.00
4,000.00
600.00
1,945.79
2,329.13
30.00 %
7,245.69
603.81
1,725.32
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Please Note: After-tax payment is PITI minus monthly tax savings; an estimate of what the
buyer will actually pay after the mortgage and property insurance income tax deduction.
Qualifier Plus®
Training Program
Chapter 12: Estimated Tax Savings
-- 50 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Practice Problem: Chapter 12
1. A couple is looking to purchase a home in the $250,000 price range
with a 30-year fixed-rate loan at 7%. They have 15% down and are in
the 28% tax bracket. Annual property tax is $3,000 and hazard
insurance is $400. What is their estimated tax savings (annual and
monthly) and net, after-tax payment?
Answers: $4,985.85; $415.49; $1,281.61
Chapter 12: Estimated Tax Savings
© 2004 Calculated Industries RE-8-3/04
-- 51 --
Notes:
Chapter 13
Rent vs. Buy Comparisons
Along with the tax savings feature, rent vs. buy is a useful calculation, as an
important area of potential new business for a real estate agent helping renters
become homeowners. The Qualifier Plus IIIx can help with this conversion by
finding a comparable home price at the level of rent they are currently paying.
Please Note: This is different from previous tax savings function, as, in addition to calculating
an estimated income tax savings, it uses current rent and determines an equivalent home price
and loan amount. You simply enter current loan rate/term and property/insurance rates, as well
as the renter’s tax bracket and monthly rent.
Example: A person is currently renting a home for $1,250 per month.
Current fixed-rates are 7.5% on 30-year loans and the renter can afford
to put 10% down. Local property taxes run 1.25% and hazard insurance
runs 0.35%. The renter is in the 28% income tax bracket. Assuming
good credit, what comparably priced home and loan amount can he/she
afford for the same monthly expenditure? What is estimated annual and
monthly income tax savings if he/she purchases a home, instead of
renting?
Steps
Keys
Display
Clear Calculator
Enter Interest
Enter Term
Enter Down Payment
Enter Property Tax*
Enter Insurance*
Enter Tax Bracket
Enter Rent








0.00
7.50 %
30.00
10.00 %
1.25 %
0.35 %
28.00 %
216,781.98
At $1,250 in monthly rent, they could afford a home priced at over $216K
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Qualifier Plus®
Training Program
Chapter 13: Rent vs. Buy
-- 52 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Display Loan Amount
Find Total Payment


Find Annual Tax Svgs 
Find Monthly Tax Svgs 
195,103.78*
1,653.24**
4,838.84
403.24
* With 10% down, this would be the loan amount.
**Although higher than rent, they would achieve the income tax savings shown above,
making it equal to what they are currently paying.
Practice Problem: Chapter 13
1. A person is currently renting a home for $1,400 per month. Assume
that current fixed interest rates are 7% on 30 year amortized loans
and the renter can afford to put 20% down. Local property taxes run
1.25% and hazard insurance runs 0.35%. The renter is in the 30%
income tax. What is the price they could afford paying $1,400 per
month? Loan amount? Estimated annual and monthly income tax
savings?
Answers: $282,846.04; $226,276.83; $1,882.55; $5,790.64; $482.55
Chapter 13: Rent vs. Buy
© 2004 Calculated Industries RE-8-3/04
-- 53 --
Notes:
Chapter 14
Future Value / Appreciation
Another financial aspect in which buyers may be interested in is how
much their home will be worth in the future. You can use the Qualifier
Plus IIIx to quickly calculate the future value or appreciation a home
may experience in their area. Enter the local home appreciation rate
as the interest, the current home price as the present value (into the 
key). Then solve for Future Value, the second function of .
When figuring
annual
appreciation,
remember to
reset
payments per
year to 12
when finished.
Please Note: You must set the calculator to 1 payment per year for future value
problems, as it is default/factory-set to 12 for monthly loans.
Example: A buyer is considering the purchase of a home that is
currently selling for $475,000. What will the home be worth in 5 years, if
the local home appreciation rate is 6%?
Steps
Keys
Display
Clear Calculator
Set Payments / Year
Enter Term
Enter Interest
Enter Present Value
Find Future Value






0.00
1.00
5.00
6.00 %
475,000.00
635,657.15
Reset Payments / Year 
12.00
Practice Problem: Chapter 14
1. To what value will a $350,000 appreciate in 7 years, if the
annual appreciation rate is 5%?
Remember,
even after you
have entered
the variables,
you can
change any
one of them
and solve for
the missing.
For example,
enter a new
interest rate
and calculate
the new future
value.
Answer: $492,485.15
Qualifier Plus®
Training Program
Chapter 14: Future Value / Appreciation
-- 54 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 15
Prices and Yields / Trust Deeds
The Qualifier Plus IIIx also easily handles trust deed purchase price and yield
problems. Use the  key when solving for yield or rate of return and  when
solving for purchase price.


Example (Finding Price with a Desired Yield): A $79,000 note at
8.5%, payable at $607.44 per month, is due in 7 years. An investor
would like to buy this note at a price that will yield18%. What price
should the investor pay?
Steps
Keys
Display
Clear Calculator
Enter Note Amount
Store Value
Enter Interest
Enter Payment
Enter Term
Find Future Value
Enter Desired Yield
Find Value
Subtract from Memory
Find Desired Price











0.00
79,000.00
79,000.00
8.50 %
607.44
7.00
73,532.64
18.00 %
49,955.07
49,955.07
29,044.93
Clear Memory

0.00

Example (Finding the Yield of Discounted Note): A seller is offering a
note with the following terms: 60 months remaining on term, a face
amount when due of $8,000, payable $65.00 per month. The seller is
offering this note at $7,000. What is the investor’s yield? What if the
investor wanted a 15% yield, what should they pay?
Steps
Keys
Display
Clear Calculator
Enter Future Value




0.00
Enter Note Price
Chapter 15: Prices and Yields / Trust Deeds
© 2004 Calculated Industries RE-8-3/04
-- 55 --
8,000.00
7,000.00
Notes:
Enter Monthly Pmt
Enter Remaining Term
Determine Yield
Enter Desired Yield
Find Desired Price





65.00
60.00
13.18 %
15.00 %
6,528.79
Practice Problem: Chapter 15
1. A $35,000 second note at 9% payable $281.62 per month is due in 5
years. An investor will buy this note at a price that will yield 22%. What
price should the investor pay?
Answer: $13,521.08
Qualifier Plus®
Training Program
Chapter 15: Prices and Yields / Trust Deeds
-- 56 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 16
Combo Loans
Comparing to PMI 1st (80:10:10 or 80:15:5)
Combo loans
allow the
borrower to
write-off
interest on the
first and
second trust
deeds. This is
an excellent
selling point.
The Qualifier Plus IIIx also figures combo loans (1st and 2nd trust deeds),
which are common financing options for clients with smaller down payments
who want to avoid mortgage insurance. The benefit of a combo loan over a
single, fixed-rate loan with mortgage insurance is that the buyer may actually
save money obtaining two loans (e.g., 80:10 or 80:15) vs. a single, larger
loan requiring monthly mortgage insurance. However, it may be cheaper to
go with a 90-95% first and pay mortgage insurance.
You can use the Qualifier Plus IIIx to quickly compare these loan scenarios.
Of course, your solutions will be estimates only, as the lender will provide the
actual loan data. Still, it can be a benefit to show clients with limited down
payments that they can avoid mortgage insurance and save money at the
same time.

Example (80:10:10 Combo Loan): Your buyer may qualify for an
80:10:10, or ‘combo’ loan, to avoid mortgage insurance due to a low
down payment. If the loan amount is $350,000, determine the savings
of the combo loan if the variables are:




1st TD:
2nd TD:
LTV:
6.75%, 30 years
7.5%, 10 years
80:10


If they choose the fixed-rate loan and pay mortgage insurance, use
the following for a comparison:


Fixed-Rate Loan w/PMI: $350,000, 7%, 30 years, 0.75% mortgage
insurance rate
Chapter 16: Combo Loans
© 2004 Calculated Industries RE-8-3/04
-- 57 --
Notes:
Steps
Keys
Display
Enter the fixed-rate loan, estimated mortgage insurance, and then find the monthly payment:
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Enter Mortgage Ins*
Find P&I Payment
Find Pmt w/ Mtg Ins







0.00
350,000.00
7.00 %
30.00
0.75 %
2,328.56
2,547.31
Enter the combo loan interest and term for 1st and 2nd TDs:
Enter 1st Int & Term
Enter 2nd Int & Term


6.75–30.00
7.50–10.00
Solve for the combo loan variables:
Find Combo (1st/2nd) Int
Find Fixed-Rate Int
Find Combo Pmt
Find Fixed-Rate Pmt
Find Monthly Svgs
Show Adjusted Term
Find 1st TD Loan Amt
Find 2nd TD Loan Amt
Find 1st TD Payment
Find 2nd TD Payment
Display LTV











6.79 %
7.91 %
2,479.48
2,547.31
67.83
8.22
311,111.11
38,888.89
2,017.86
461.62
80.00–10.00
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Example (80:15:5 Combo Loan): Your buyer may qualify for an
80:15:5 combo loan of $275,000. 1st/2nd TD variables are:
1st TD:
2nd TD:
LTV:
6.67%, 30 years
8%, 7 years
80:15
If they choose the fixed-rate loan and pay mortgage insurance,
use the following for a comparison:
Fixed-Rate Loan w/PMI: $275,000, 7.25%, 30 years, 0.75%
mortgage insurance rate
Qualifier Plus®
Training Program
Chapter 16: Combo Loans
-- 58 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Steps
Keys
Display
Enter fixed-rate loan, estimated mortgage insurance, and then find the monthly payment:
Clear Calculator
Enter Loan Amount
Enter Interest
Enter Term
Enter Mortgage Ins*
Find P&I Payment
Find Pmt w/ Mtg Ins







0.00
275,000.00
7.25 %
30.00
0.75 %
1,875.98
2,047.86
Enter the combo loan interest and term for 1st and 2nd TDs:
Enter 1st Int & Term
Enter 2nd Int & Term


6.67–30.00
8.00–7.00
Solve for the combo loan variables: Use the second function of the  key for the LTV of
80:15:5.
Find Combo (1st/2nd) Int
Find Fixed-Rate Int
Find Combo Pmt
Find Fixed-Rate Pmt
Find Monthly Svgs
Show Adjusted Term
Find 1st TD Loan Amt
Find 2nd TD Loan Amt
Find 1st TD Payment
Find 2nd TD Payment
Display LTV











6.75 %
8.16 %
2,166.49
2,047.86
-118.63*
7.00
231,578.95
43,421.05
1,489.72
676.77
80.00–15.00
* In this example, the fixed-rate loan is the better deal. The 1st/2nd TD payment is almost
$120 more than the fixed-rate loan w/PMI.
Please Note: The Qualifier Plus IIIx handles both 80:10:10 and 80:15:5 LTV combo loans,
but also accepts any LTV. Simply enter any LTV (e.g., 90 5) using the colon key, then press
the  key and resolve the above.
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

to enter tax,
insurance
and/or
mortgage
insurance.
Chapter 16: Combo Loans
© 2004 Calculated Industries RE-8-3/04
-- 59 --
Notes:
Practice Problems: Chapter 16
1. You are comparing a 6.75%, 30-year fixed-rate loan of $275,000 vs. an
80:10:10 combo loan with the following: 1st TD @ 6%, 30 term; 2nd TD
@ 8%, 10 term. Since the buyers can only put 10% down, mortgage
insurance is required for the 90% first. Estimate mortgage insurance at
0.5%. Find all comparison values for the combo loan without mortgage
insurance vs. the fixed-rate loan w/mortgage insurance.
Answers: 6.10% (blended interest rate); 7.37% (equivalent fixed-rate
w/mortgage ins.); $1,836.29 (1st/2nd combined payment); $1,898.23
(fixed-rate loan PIMI payment); $61.94 (monthly savings over fixed-rate
loan); 7.98 (adjusted term of 2nd TD if savings applied); $244,444.44
(1st TD); $30,555.56 (2nd TD); $1,465.57 (1st TD payment); $370.72
(2nd TD payment).
So, you save approximately $62 per month with the combo loan.
Do Not Clear Calculator
2. Using same values as above, find the comparison for an 80:15:5 combo
loan.
Answers: 6.15% (blended interest rate); 7.37% (equivalent fixed-rate
w/mortgage ins.); $1,915.25 (1st/2nd combined payment); $1,898.23
(fixed-rate loan PIMI payment); $-17.02 (in this case, costs slightly more
than fixed-rate loan); 10.00 (adjusted term of 2nd TD; the same in this
case/no savings); $231,578.95 (1st TD); $43,421.05 (2nd TD);
$1,388.43 (1st TD payment); $526.82 (2nd TD payment).
Here, the fixed-rate loan is slightly less per month.
Qualifier Plus®
Training Program
Chapter 16: Combo Loans
-- 60 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 17
Calculating Commission / Listing Price
Using the Qualifier Plus IIIx, you can instantly calculate commission using
the percent  key.

It is important
to calculate
what’s in it for
you. If the
opportunity is
too small and
there is a split
with a broker,
it may be best
to move on to
the next deal.
Example (Commission): If the commission is 3% and the home sold
for $459,700, what is the commission in dollars?
Steps
Keys
Display
Clear Calculator
Enter Sale Price
Multiply by Percentage
Find Commission




0.00
459,700
0.03
13,791.00
Do Not Clear Calculator

If you must split 50% of the commission with your broker, what is your
commission?
Steps
Keys
Multiply by Percentage 
Find Half Commission 

0.5
6,895.50
Example (Listing Price): Your buyer is anxious to sell, and you
suggest reducing the sales price by 3%. If the price was originally
listed at $365,500, what is the new price?
Steps
Keys
Display
Clear Calculator
Enter List Price
Subtract Percentage
Find New Price




0.00
365,000
10,965.00
354,535.00
Chapter 17: Commission / Listing Price
© 2004 Calculated Industries RE-8-3/04
Display
-- 61 --
Notes:
Practice Problems: Chapter 17
1. Find your commission if the home sold for $459,500 and the
commission rate is 1.5%.
Answer: $6,892.50
2. You are reducing the sales price by 3%. What is the new price, if it was
originally listed at $359,000?
Answer: $348,230.00
Qualifier Plus®
Training Program
Chapter 17: Commission / Listing Price
-- 62 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 18
Additional Financial Examples
In addition to calculations for strictly real estate purposes, the calculator can
be used for a variety of financial calculations of interest to consumers and
real estate professionals. Here are a few examples:

Example (Future Value of an Initial Deposit/Lump Sum): If you invest
$25,000 today, what will it be worth in 10 years, if the annual interest
is 6%, compounded monthly?
Steps
Keys
Display
Clear Calculator
Recall Pmts / Year
Enter Present Value
Enter Term
Enter Interest
Find Future Value

 *




0.00
12.00
25,000.00
10.00
6.00 %
45, 484.92
*Please Note: If payments per year is not set to 12, enter 12 .

Example (Finding Monthly Investment to Reach Future Savings
Goal): If you invest $5,000 today into a Roth IRA, what should you
invest monthly in order to reach $250,000 in 30 years? Use an
average return of 7%, compounded monthly.
Steps
Keys







Find Monthly Payment 
Clear Calculator
Recall Pmts / Year
Enter Initial Investment
Enter Term
Enter Interest
Enter Desired FV
* Negative sign means it’s a cash outlay.

Chapter 18: Additional Examples
© 2004 Calculated Industries RE-8-3/04
-- 63 --
Display
0.00
12.00
5,000.00
30.00
7.00 %
250,000.00
- 171.66*
Notes:

Example (Retirement Savings): You have $300,000 in a retirement plan
earning 4%. If you wish to withdraw $1,500 per month to supplement
your rental and social security income, how long will the $300,000
last?
Steps
Keys
Display
Clear Calculator
Enter Balance
Enter Interest
Enter Withdrawal
Find Duration (Term)





0.00
300,000.00
4.00 %
1,500.00
27.51 Years
This retirement
savings
example is
merely a
guideline
and does not
take annual
cost-of-living
increases or
other factors
into account.
Do Not Clear Calculator

What if you took out $2,000 per month, how long would it last?
Steps
Keys
Display
Enter Withdrawal
Find Duration (Term)


2,000.000
17.36 Years
Example (Lease): People often complain that they cannot save enough
down payment to buy a home. It may be that they do not understand the
cost of overspending. For example, a person is looking to lease a car.
They have the choice of a luxury car at $500 per month or a more
modest car at $200 per month. Over a 5-year lease, what is the savings,
assuming they can earn 4% interest on the difference of $300/month?
$500
-200
$300
Monthly Lease Payment on Luxury Car
Monthly Lease Payment on More Modest Car
Difference per Month, Invested at 4% per Year
for 5 Years, Equals $19,889.69 (FV)
Steps
Keys
Display
Clear Calculator
Enter Payment
Enter Interest
Enter Term
Find Savings (FV)





0.00
300.00
4.00 %
5.00
–19,889.69
Qualifier Plus®
Training Program
Chapter 18: Additional Examples
-- 64 --
© 2004 Calculated Industries RE-8-3/04
Notes:
It will cost $19,889.69 more to lease the luxury car. According to this
example, a person could lease a modest car and invest the $300 per month
difference. In 5 years at 4% they would have almost $20K toward the down
payment on a home!
Practice Problems: Chapter 18
1. Over the next 20 years, you wish to accumulate $500,000 in your
retirement plan. At a 4% average yield (interest on your money), how
much do you need to invest each month?
Answer: $–1,363.23
Do Not Clear Calculator
2. What if you could earn 8% instead?
Answer: $-848.87
Chapter 18: Additional Examples
© 2004 Calculated Industries RE-8-3/04
-- 65 --
Notes:
Chapter 19
Preference Settings
Your calculator offers various custom settings that you may choose to select.
The tax/insurance setting, in particular, may be useful, as one of the selections
lets you permanently store your entered tax/insurance rates.
Please Note: See either the Qualifier Plus IIIx or Qualifier Plus IIIfx User's Guide for other
custom settings.
Press the  and then the  key to access Preference Settings.
Storing Property Tax and Insurance Rates Permanently:
To program your calculator to hold property tax and property insurance
percentage rates even after you turn your calculator off, continue to press the 
key until “Clr OFF Tax Ins” is displayed. Then press the  key to advance to
the second subsetting. It will read “Hold Pct.” Press any key to exit. From now
on, if you enter a tax or insurance rate, it will not clear until you enter new
ones.*
To recall your stored rates, press  *or . *
Storing Mortgage Insurance Rate Permanently:
Repeat the procedure shown above, except press the  key until “Clr Clr M
Ins” displays. Then press the  key to advance to the third subsetting. It will
read “Hold Pct.” Press any key to exit. From now on,
if you enter a mortgage insurance rate, it will not clear until you enter a new
one.*
To recall your stored rate, press  .*
* Please Note: Resetting the calculator or losing battery power will clear all values and return
all preference settings to their defaults.
Qualifier Plus®
Training Program
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , ,
and/or 
to access tax,
insurance
and/or
mortgage
insurance.
Chapter 19: Preference Settings
-- 66 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 20
Case Study – Putting It All Together and Selling the
Numbers
You have a new buyer that was referred by your last sale.
John and Trisha Bugati are interested in purchasing a home, but they have
not been pre-qualified. They are also hesitant about investing in a home, as
they want to make sure they will see some return after five years in the
home.
There are many questions that we require answers before the Bugatis will
feel comfortable with the purchase of the home.
Let’s take a look at pre-qualifying the Bugatis. John makes $30,000 and
Trisha makes $40,000 annually. John and Trisha have the following monthly
revolving debt:




Honda
Ford
AMEX
Visa
$375
$400
$100
$300
The tax rate in their area is 1.25% and the property insurance is about .3%.
John and Trisha want to put 20% down, rates are around 6% and they are
looking at a 30-year fixed-rate mortgage.
Now, if you qualify them on Fannie Mae and Freddie Mac ratios (28% income
– 36% debt), what purchase price, down payment and loan amount can they
expect? What will they have as a monthly PITI payment?
And, if the Bugatis are in a 28% tax bracket, what will they save in estimated
annual and monthly income tax savings? If they applied their estimated
monthly tax savings to their payment, how many years would be left on their
30-year note?
Finally, if homes appreciate at 10%, what will be the value of the Bugatis
investment after 5 years?
The following example will take you through the steps.

Example: What can the Bugatis afford?
Chapter 20: Case Study
© 2004 Calculated Industries RE-8-3/04
-- 67 --
Notes:
Steps
Keys
Display
Clear Calculator
Enter Income
Enter Total Debt
Enter Tax*
Enter Down Pmt
Enter Insurance*
Enter Term
Enter Interest








0.00
70,000.00
1,175.00
1.25 %
20.00 %
0.03 %
30.00
6.00 %


28.00-36.00
121,549.18
What is their loan amount?
Display Qual1 Ratios
Find Qual Loan Amt
What is their purchase price?
Display Sale Price

151,936.47
What is their down payment?
Display Down Pmt %
Display Down Pmt $


20.00 %
30,387.29


728.75
925.00
What is their PITI payment?
Find P&I Payment
Find PITI Payment
If the Bugatis are in a 28% tax bracket, what will they save in estimated
annual and monthly tax savings?
Display Tax Bracket

Show Annual Tax Svgs 
Show Mnthly Tax Svgs 
28.00 %
2,562.43
213.54
If you are
using a
Qualifier Plus
IIIfx, you will
need to press
 , , and/or

Do Not Clear Calculator
If they applied their monthly tax savings to their payment, by how much
will they reduce their term?
to enter tax,
insurance
and/or
mortgage
insurance.
Please Note: If you still have the monthly tax savings in your display, start with  in this
example, if you have cleared your calculator, repeat the previous calculation.
Qualifier Plus®
Training Program
Chapter 20: Case Study
-- 68 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Steps
Keys
Display
Show Mnthly Tax Svgs
Add to P&I Pmt
Find Total
Enter Into Payment
Find New Term





213.54
728.75
942.28
942.28
17.30

By applying the estimated monthly tax savings of $213.54 to the
payment, the Bugatis have reduced their loan term by 12.7 years and
have saved a considerable amount in interest.
Do Not Clear Calculator

If the Bugatis bought the home for $151,936.47, and if homes in their
area appreciated at 10% per year, what would be the estimated value
of their home after 5 years?
Steps
Keys
Display
First, you have to change the payment schedule to 1 payment per year.
Set Pmts Per Year

P/Y 1.00
Enter the purchase price into the loan amount key, the 5-year term into the term key, and
10% interest into the interest key.
Enter Purchase Price
Enter Term
Enter Appreciation




151,936.47
5.00
10.00 %
Solve for the annual appreciation.
Find New Home Value 

174,591.70
The Bugatis would have an estimated $22,655.23 in additional equity
after 5 years of living in their new home.
Please Note: It is always a good idea to recommend to your clients that they see a
mortgage broker (with whom you have a relationship) to get fully qualified, as credit and
aggressive loan programs may provide your borrower with more or less purchasing power.
Chapter 20: Case Study
© 2004 Calculated Industries RE-8-3/04
-- 69 --
WORKBOOK
Module III
Introduction to Commercial / Investment
(Page Purposely Left Blank)
Notes:
Module III – Introduction to Commercial Investment
Chapter 21
Assumptions
Basic Assumptions Before You Begin
"Personally, I'm always ready to learn, although I do not always like being taught."
Winston Churchill
Basic assumptions about this module




You have already previewed the “User’s Guide”
You understand the calculator’s applications on “time value of money”
(TVM)
You have practiced loan amortization
You can change the significant places on the calculator
How this module works
The skills covered in this module will be taught through a case study approach
using a 10-unit apartment building. Each skill will be presented as follows:



A discussion of the skill
An example with keystrokes
An exam may be given at the end of the module
Skills Covered
Skills covered in this module will include:




Analyzing income and expense through the Property Profile Form (PPF)
“Baseline” calculations in commercial and investment real estate
Inputting cash flows
Solving for internal rate of return (IRR) and net present value (NPV)
Qualifier Plus®
Training Program
Chapter 21: Intro to Commercial Investment
-- 72 --
© 2004 Calculated Industries RE-8-3/04
Notes:
A Word About Taxes
In application, the tax implications of investment real estate are important.
However, the scope of this workbook is limited and will not provide you
adequate information to fully understand the tax implications of buying,
owning, and selling investment and commercial properties.
The examples and references in this book will be “tax neutral” meaning they
make no representation as to the tax implications of the decisions made. As
a practitioner, you should always consult a qualified tax advisor when
working with clients. To further your study of taxes and commercial
investment real estate application, we suggest attending a continuing
education course specific to these topics.
Please Note: One of the powerful components of the Qualifier Plus IIIfx is the ability to
calculate the tax deduction from interest payments though the loan amortization sequence.
See the User’s Guide for reference on keystrokes and applications.
Chapter 21: Intro to Commercial Investment
© 2004 Calculated Industries RE-8-3/04
-- 73 --
Notes:
Chapter 22
Case Study
The Case Study 10-Plex
“Before all else, beginning begins with getting ready”
Henry Ford
Case Study Property Information
Property Type:
Asking Price:
Gross Rental Income:
Vacancy:
Expenses:
Size:
Other Costs of Acquisition:
10 Unit Apartment
$700,000
$112,200
7% of Gross Income
$39,480
15,000 Square Feet
$5,000
Financing Information
Available Loan:
Amortization Term:
Interest Rate:
75% Loan-to-Value
25 Years
8.25% Annually
Investor Information
Desire Cap Rate:
Desired Return on Equity:
Available Funds:
Qualifier Plus®
Training Program
9.5%
13%
$250,000
Chapter 21: Intro to Commercial Investment
-- 74 --
© 2004 Calculated Industries RE-8-3/04
Property Profile
Form
Case Study Problem
Notes:
Chapter 23
RENT PER
MONTH
NUMBER
UNITS
MONTHLY
INCOME
Step #1 – Getting Started
1 BR / 2BA
2 BR / 1 BA
3 BR / 2BA
ANNUAL
INCOME
3
2,025
"Beware
of little expenses. A675
small leak will sink a big ship."
4
950
3,800 Franklin
Benjamin
3
1,175
3,525
24,300
45,600
42,300
112,200
The Property Profile Form
ITEM
EXPENSE
INCOME
The Property Profile Form (PPF) is where the analysis of cash flow begins.
112,200
Potential Gross Income
-Vacancy
The Form, in
=Effective Gross Income
estate world:
+Other Income
=Gross Operating Income
The
7,896
various applications,
is used by everyone in the investment real
104,304
investors, brokers, lenders appraisers,...
0
104,304
PPF can be "actual" or "projected".
Operating Expenses:
4,355
Real Estate Taxes
2,300
Personal Property TaxesThe Two Cash Flow Equations
3,500
Property Insurance
From the PPF we derive the following
Personnel Payroll
Off-site Management
Taxes/Workers
comp.
Repairs & Maintenance
two “must remember” equations:
6,300
Abbreviations to Remember
NOI
Net Operating Income
ADS
Annual Debt Service
PTCF
Pre-Tax Cash Flow
Administrative Expenses:
Accounting & Legal
Leasing Commissions
Advertising
Licenses & Permits
1,500
Equation #1:
Other Professional Fees
Utilities:
Water
Electricity
Gas
Garbage
Sewer
Cable
Miscellaneous:
MINUS
PLUS
MINUS
EQUALS
950
INCOME
645
<VACANCY>
OTHER INCOME
<EXPENSES>
3,400
NET7,800
OPERATING INCOME
0
2,500
Equation #2:
Supplies
MINUS
EQUALS
NET980
OPERATING INCOME
<ANNUAL DEBT SERVICE>
PRE-TAX CASH FLOW
Grounds
Other
750
4,500
TOTAL EXPENSES:
39,480
64,824
NET OPERATING INCOME:
<LESS ANNUAL DEBT SERVICE>:
<49,672>
15,152
=PRE TAX CASH FLOW:
The information herein, while from sources deemed reliable, should be verified by any prospect's independent tax and/or
Chapter 21: Intro to Commercial Investment
legal counsel. Subject to prior sale, changes without notice, and withdrawal.
© 2004 Calculated Industries RE-8-3/04
-- 75 --
-- 76 --
Notes:
Chapter 24
Step #2 – Using Benchmarks
"Do what you can, with what you have, where you are."
Theodore Roosevelt
Cash on Cash (C/C)
The ratio of the investor's total costs of acquisition to the property's cash
flows.
Total costs of acquisition include down payment plus all other costs including
legal fees, commissions, engineering, permits...
Pre-Tax
Cash on Cash
PTCF
Initial Investment
Down
Payment

Steps
Other
Cost of Acquisition
+
Example: An investor is considering a property with a net operating
income (NOI) of $45,000. You determine that a loan with an annual
payment (P + I) of $36,500 is available. The down payment required
is $150,000. Other costs of acquisition will include closing costs,
legal, and accounting of $5,000. What is the cash on cash?
Keys
Clear All Registers

Enter NOI

Subtract Ann Debt

Store in Memory 1

Clear Display

Add Down and Costs 
Store in Memory 2

Recall Memory 1

Divide Mem1 by Mem2 
Display Value



The cash on cash is 5.48%

Chapter 21: Intro to Commercial Investment
© 2004 Calculated Industries RE-8-3/04
-- 77 --
Display
ALL CLEArEd
45,000
8,500.00
8,500.00 M-1
0.00
155,000.00
155,000.00 M-2
8,500.00 M-1
0.05
0.0548
Notes:
Gross Rent Multiplier (GRM)
GRM is a rule of thumb normally used in the apartment (multi-family) side of
the business. It is simply the number of years of gross rent required to
recapture the purchase price.
Gross Rent
Multiplier
Total Price
Potential Gross Income
(no vacancy, no expenses)
Example: The asking price of the property from the previous example is
$600,000. Your analysis of the PPF shows that the potential gross
income is $63,000.
What is the GRM?
Steps
Keys
Display
Clear All Registers
Enter Total Price
Divide by Potential Inc
Find GRM




ALL CLEArEd
600,000
63,000
9.52
The GRM is 9.52
Cost Per Square Foot
In the investment side of the business, costs per square foot are almost always
used in relationship to land, but can also be applied to improvements
(buildings).
Cost per S.F.
Total Costs
Number of Square Feet
Example: A developer is interested in a piece of land on a busy corner.
The asking price is $1,200,000. The assessor’s record shows the land
to be 1.2 acres (43,560 square feet in an acre).
What is the cost per square foot of the land?
Qualifier Plus®
Training Program
Chapter 21: Intro to Commercial Investment
-- 78 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Steps
Keys
Display
Clear All Registers
Enter Square Feet
Multiply by Acres
Store in Memory 1
Clear Display
Enter Price
Divide by Sq Footage
Find Cost Per Sq Ft








ALL CLEArEd
43,560
52,272.00
52,272.00 M-1
0.00
1,200,000
52,272.00 M-1
22.96

The cost per square foot is $22.96
Capitalization Rate (Cap Rate)
The "cap" (capitalization) rate technique is used to determine what you would
pay today for the perpetual benefit of an income stream. The term “rate”
denotes a number less than 1. In other words a “10 cap” is really 10% or
0.10. Mathematically, because you are dividing the numerator (NOI) by a
number less than 1 (cap rate), the result will be a number greater than the
numerator (price). There is another mathematical phenomena to remember:
The lower the cap, the higher the price
The higher the cap, the lower the price

The Cap Rate Equation:
Price =


NOI .
Cap Rate
Example: An investor tells you that he won’t buy on anything “less than a
9 cap”. You locate a property with an NOI of $74,000.


How much can the investor pay for the property?
Steps
Keys
Display
Clear All Registers
Enter NOI
Divide by Desired Cap
Find Cap Rate




ALL CLEArEd
74,000
0.09
822,222.22

The price can be no more than $822,222 to preserve the desired 9%
cap rate.
Chapter 21: Intro to Commercial Investment
© 2004 Calculated Industries RE-8-3/04
-- 79 --
Notes:
Chapter 25
Step #3 - Uneven Cash Flows and the "Cash-Asset-Cash
Model"
"What is essential is invisible to the eye"
Antoine de St. Exuperie
In the world of investments, (real estate or otherwise), investors can measure
the financial benefits of an investment with a fundamental component: cash
flows.
The “Cash-Asset-Cash” Model
When we analyze the cash flows from an investment, a simple and effective
tool is available to the investment professional. We call it the “cash-asset-cash
model”. The cash-asset-cash model assumes every investment has a
“lifecycle”. It has a beginning (cash), a middle (asset), and an end (cash).

Cash Out: The initial cash paid by the investor to control the asset.
Typically this is the sum of the down payment plus the other costs of
acquisition.


Cash Flows: Cash flows from operations of the holding term of the
investment. Can be either positive or negative.


Cash In: The cash received by the investor at the sale of the asset.
Cash flows in this portion of the investment lifecycles are composed of
two parts-- cash flows from operations in the year of sale plus the
proceeds from the sale.
Graphically, we depict the cash-asset-cash model with a simple “T” account.
T
$
WHERE:
“T” represents time expressed in
time periods (years)
“$” represents money paid or received
at the corresponding time period
An example of the cash-asset-cash model from the investor's point of view
might be:
Qualifier Plus®
Training Program
Chapter 21: Intro to Commercial Investment
-- 80 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Down payment:
-100,000
Cash
Cash flows from operations year 1:
25,000
Asset
Cash flows from operations year 2:
14,000
Asset
Cash flows from operations year 3:
-8,000
Asset
Cash flows from the sale in year 3:
450,000
Cash
Placing this investment in the cash-asset-cash model would make it appear
as follows:
T
$
0
-100,000
1
25,000
2
14,000
3
-8,0000 + 450,000 = 442,000
Please Note: In practice, cash flows received by the investor can (and should) be analyzed
on an “after-tax “ basis because down payment + other costs of acquisition are after-tax
dollars. Until you have taken further continuing education regarding interest, depreciation,
and other tax implications that create after-tax cash flows, consult a tax advisor as to the tax
effects on cash flows for any property you are analyzing.
Inputting Uneven Cash Flows
The calculator allows you to input even or uneven cash flows that occur at
regular periods in order to analyze them. This is a required function to
determine internal rate of return (IRR) and net present value (NPV), to be
discussed in the next section.
Chapter 21: Intro to Commercial Investment
© 2004 Calculated Industries RE-8-3/04
-- 81 --
Notes:
Assume an investment with the following cash flows:
Time Period
Amount
Description
0
-50,000
down payment + other costs
of acquisition
1
10,000
cash flows from year 1
2
12,000
cash flows from year 2
3
15,000
cash flows from year 3
4
15,000 + 110,000 cash flows from year 4 +
sales proceeds year 4
Example: Load the cash flows above into your calculator.
Steps
Keys





Enter Time Period 1

Enter Time Period 2

Enter Time Period 3

Enter Time Period 4 * 

Clear All Registers
Set Zero Decimals
Set One Pmt Per Yr
Enter Time Period 0
Display
ALL CLEArEd
0.
1. P/Y
-50,000 C-0
10,000 C-1
12,000 C-2
15,000 C-3
125,000 C-4
Do Not Clear Calculator
* Cash flows from the last year of operations must be added to the cash received at the sale
because the investor receives them in the same year.
Please Note: For more information on recalling cash flows, frequencies, and over-writing
incorrect cash flows, see the User’s Guide that was provided with the calculator.
Qualifier Plus®
Training Program
Chapter 21: Intro to Commercial Investment
-- 82 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Chapter 26
Step #4 - Internal Rate of Return and Net Preset
Value
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."
Aristotle
Internal rate of return and net present value are two common
methods of measuring the value of an investment. Both methods are
based on analysis of the cash flows for the investment.
Internal Rate of Return (IRR)
The internal rate of return is defined as:
The interest rate received for an investment consisting of positive and
negative cash flows that occur at regular periods.
Once you've mastered inputting cash flows into the calculator, the
steps are relatively easy.

Example (IRR): To calculate the IRR for the cash flows in the
Chapter 25 example, do the following:


1. Enter the desired cash flows into the calculator (see
previous chapter)


Steps
2. Solve for IRR
Keys
Final Cash Flow From Previous Example
Solve for IRR

Do Not Clear Calculator
Chapter 21: Intro to Commercial Investment
© 2004 Calculated Industries RE-8-3/04
-- 84 --
Display
125,000. C-4
‘run’ 41. %
Notes:
Net Present Value (NPV)
Net Present Value is defined as:
The amount more or less than the initial investment the investor can
afford to pay at time period zero to achieve the desired rate of return.
The Theory:
NPV is a discounting operation (discounting solves for “present value”).
The calculator calculates NPV by discounting the cash flows one at a
time, and then adding the discounted values of future cash flows against
the initial investment. To perform NPV, you will need to insert a
“reinvestment rate” into the calculator as the value. The reinvestment
rate is the rate of return the investor desires from the subject
investment, or what he could earn from a different investment.
How it works:
Let’s say the investor wants a 15% annual return on investment. For the
cash flows in the previous example, the NPV calculation would start at
time period 1 (c-1) which is 10,000, label it as “FV”, use 1 as the , use
the reinvestment rate of 15% as  and solve for .
It would then go to time period 2 (c-2) which is 12,000, label it as “FV”,
use 2 as the , use the reinvestment rate of 15% as  and solve for .
After this process has been completed for all cash flows (c1 – c4), the
calculator then adds the discounted values of future cash flows against
the initial investment.
The NPV solution is a number value, not a percentage.
Example: For an investment with cash flows from the previous
example, an investor has indicated a desire to purchase, but
requires a 15% annual return on investment. What should he pay
at time period zero (down payment + other costs of acquisition)
for the benefit of these cash flows?
Qualifier Plus®
Training Program
Chapter 21: Intro to Commercial Investment
-- 85 --
© 2004 Calculated Industries RE-8-3/04
Notes:
Steps
Keys
Display
IRR From Previous Example
Enter Reinvest Rate

Solve for the NPV

41.
15. %
49,101.
Notice that the NPV is a positive number. This means that to achieve
the desired 15% rate of return on the given cash flows, the investor
needs to pay $49,101.28 more than the $50,000 initial investment at
time period zero. Put another way, he must pay $99,101.28 to bring
the rate of return (IRR) down to the desired 15%.
The moral of the story:
If the NPV is negative, the investment is not performing to expectation.
If the NPV is positive, the investment is exceeding the expectation.



Example: An investor is interested in purchasing a small
commercial building with an asking price of $900,000. The
building currently has 4 tenants. From your due diligence,
research, and co-review with the client’s tax advisor, you have
determined the following elements:


Down payment + other costs of acquisition:
$195,000


Cash flows after tax considerations:



Year 1 $25,000
Year 2 $28,000
Year 3 $28,000
Year 4 $29,000

Sales proceeds after appreciation, tax
considerations and mortgage payoff:

Question 1: What is the IRR of the property?

Year 4 $321,000


Question 2: If the investor desires a 30% annual after-tax rate
of return, what is the NPV?
Chapter 21: Intro to Commercial Investment
© 2004 Calculated Industries RE-8-3/04
-- 86 --
Notes:
Steps
Keys
Display
Clear All Registers
Set One Pmt Per Yr
Enter Time Period 0












ALL CLEArEd
1.00 P/Y
Enter Time Period 1
Enter Time Period 2
Enter Time Period 3
Enter Time Period 4*
Solve for IRR
Enter Reinvest Rate
Solve for NPV
- 195,000.00 C-0
25,000.00 C-1
28,000.00 C-2
28,000.00 C-3
350,000.00 C-4
‘run’ 25.11 %
30.00 %
- 23,911.80 NPV
IRR: The IRR of the cash flows is 25.11%
NPV: The investor has to pay $171,088.20 ($195,000 $23,911.80) at time period zero to achieve the desired 30% rate
of return.
Clear All Registers 
Qualifier Plus®
Training Program
ALL CLEArEd
Chapter 21: Intro to Commercial Investment
-- 86 --
© 2004 Calculated Industries RE-8-3/04