A rental property is listed for $2,000,000. It contains 4 units each renting for $2,750 per month. Assuming tax rate is 1.25% of the purchase price per year and insurance is 1% of purchase price per year. If I put 5% down assuming 5% interest rate, what price should I buy this property for in order to break even on the monthly payments? Please show excel calculations.

A rental property is listed for $2,000,000. It contains 4 units each renting for $2,750 per month. Assuming tax rate is 1.25% of the purchase price per year and insurance is 1% of purchase price per year. If I put 5% down assuming 5% interest rate, what price should I buy this property for in order to break even on the monthly payments? Please show excel calculations.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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iii) A landlord needs a dollar of 250,000 to refurbish a condominium in five years' time. He will save money from rental income (paid monthly in arrears) each year and has found a safe investment paying a nominal rate of 3% per annum. Calculate the monthly amount the landlord should invest.
The Nguyens are thinking of buying a home for $121,000. A potential lender advertises an 80%, thirty-year simple interest amortized loan at 8 and 1/4% interest, with an APR of 9.23%. Use the APR to approximate the fees included in the finance charge. (Round your answer to the nearest cent.)
Suppose you purchase an automobile for a selling price of $1,600,000. You make a down payment of 5% of the selling price and finance the remaining balance for 4 years at an annual interest rate of 5%. The sales tax is 7.5% of the selling price, and the license fee is 0.8% of the selling price. Find the monthly payment.
Suppose you obtain a 20-year mortgage loan of $196,000 at an annual interest rate of 7.9%. The annual property tax bill is $966 and the annual fire insurance premium is $488. Find the total monthly payment for the mortgage, property tax, and fire insurance. (Round your answer to the nearest cent.)
Assume you buy a house for $660,000 and have $132,000 as a down payment. Your mortgage rate is 3 percent APR compounded semi-annually and you amortize the mortgage over 25 years with monthly payments. You will assume that you could have earned 5 percent EAR on the down payment (opportunity cost), your marginal income tax rate is 40 percent, real estate fees are 4 percent +HST and property taxes will be $6,600 annually for this calculation. Ignore maintenance costs. a. What is the true return on your investment if you sell it in 6 years for $1,040,000? (Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Return on Investment % b. What is an approximate annualized rate of return on your investment? (Do not round your intermediate calculations. Round your answer to 3 decimal places. Omit the "%" sign in your response.) Annualized Rate of Return %
Suppose you obtain a 30 year mortgage loan of 197,000$ at an annual interest rate of 8.1%. The annual property tax bill is $967 and the annual fire insurance premium is 495$. Find the total monthly payment for the mortgage, property tax, and fire insurance.
You have a prospective lessee for your office property and have the following options (assume a 7-year window and 2% discount rate). Which one will provide you with the highest effective rent? a. Option A: Rent is $98 per rentable square foot with the lessor paying operating expenses up to $40, lessee responsible for remainder. Operating expenses are $39 in first year and increase by $3 each year b. Option B: Rent is $90 per rentable square foot and will increase by $3 each year. Operating expenses are $40 during the first year and will increase by $1 every year. c. Option C: Rent is $91 per rentable square foot per year and will increase by $2.50 each year. Operating expenses are $45 for the first year and will increase by $3 every year, with lessor covering up to $48.
You have just purchased a new warehouse. To finance the purchase, you've arranged for a 25-year mortgage for 80 percent of the $1,800,000 purchase price. The monthly payment on this loan will be $10,800. What is the APR? The EAR? A. 7.67 percent; 7.94 percent B. 7.67 percent; 8.03 percent C. 7.72 percent; 7.94 percent D. 7.72 percent; 8.03 percent E. 7.75 percent; 8.03 percent
Suppose you obtain a 30-year mortgage loan of 194,000$ at an annual interest rate of 8.4%. The annual property tax bill is $975 and the annual fire insurance premium is $484. Find the total monthly payment for the mortgage, property tax, and fire insurance. Round your answer to the nearest cent.

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