David Saks: Real Estate Practice : Lesson 3825

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Real Estate Practice : Lesson 3825


An investor bought two lots for 40 thousand dollars each. He decided to divide the parcel into three lots and then sold each parcel for 30 thousand dollars.

(A.) How much did the investor make after he sold the three parcels ?

(B.) What percentage of profit did the investor realize on his investment ?

The answers, along with the corresponding solution, will be posted below the photographs at the bottom of the page, so spend a little time on it before you make your way to the bottom. It helps to keep your math skills sharp. Hope you have a fine week ahead.


(A.) The investor made 10 thousand dollars.

He paid 40 thousand for each lot for a total of 80 thousand dollars.

He then divided the lots into three and sold them for 30 thousand dollars each for a total of 90 thousand dollars.

Subtract 80 thousand from 90 thousand for a total of 10 thousand dollars.

(B.) The percentage of profit he realized was 12.5% or .125.

How did he do this ?

Let's take the profit of ten thousand dollars and divide it by the original cost of the two lots, 80 thousand dollars, and we get .125 or 12.5%.

David Saks

Time&Temp Memphis

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Comment balloon 10 commentsDavid Saks • November 17 2014 03:14AM


Sure David, the simple answer to your question is $10k, and this is the answer that my real estate agent would give me too.  But as an investor I find it essential to count all of the expenses, not just the gross income.

Surveying costs

Government parcelization fees

Selling costs including that 10% commission that nearly wiped out the profit by itself

and other misc costs.


So the real answer here is a negative number of around $5 to 10K.


Posted by Bob Crane, Forestland Experts! 715-204-9671 (Woodland Management Service / Woodland Real Estate, Keller Williams Fox Cities) over 5 years ago

Thanks for noting that we're just looking for the profit on the original lot expenditure here, Bob. Losses in the secondary mortgage market if the buyer defaults on the loan and other extraneous complicated conditions were extracted from the basic premiss in this example so panic attacks could be averted :-)

Have a terrific day ahead.

Posted by David Saks ((retired)) over 5 years ago

Thanks David, for the math question, got it. Have a good week.

Posted by Adrian Willanger, Profit from my two decades of experience (206 909-7536 AdrianWillanger-broker.com) over 5 years ago

I love that photo! Salamander? He is absolutely adorable! Thanks for sharing.

Posted by Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional, Palm Harbor, Dunedin, Clearwater, Safety Harbor (Charles Rutenberg Realty) over 5 years ago

Thank you, Adrian. Glad to hear from you.

Posted by David Saks ((retired)) over 5 years ago

Isn't he lovely, Barbara Jo, Corinna ? A colorful bakelite replica of him as a brooch would liven up any woman's evening wardrobe.

Posted by David Saks ((retired)) over 5 years ago

Hey David-that red gekko is beautiful. Is that a photo of you on the horse?

Posted by Marco Giancola, Realtor (305)608-1922, Miami Beach Florida (Beachfront Realty) over 5 years ago

Thanks, Marco. That's me with my pal, Tex.

He was faster than Icarus falling through the jet stream.

All you had to say to him was, "go", and he ran like the wind.

Posted by David Saks ((retired)) over 5 years ago

David, Thanks for the math problem and I am sure there are folks who would get stumped. have a great evening! 

Posted by Robert Bob Gilbert, Your Katy TX ( West of Houston) Real Estate Expert (Berkshire Hathaway HomeServices Anderson Properties) over 5 years ago

Thank you, Bob.

Posted by David Saks ((retired)) over 5 years ago

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