per month. 4 apartment renting for $580per month and 5 apartments each renting for $150.00per week. Expenses are $1800per quarter. If the buyer pays $1,033,950.00 for theapartment house, What rate of return will be received for his investment? Please show all steps to the answer.
2006-11-17 10:40:57 · 4 answers · asked by ace 2 in Business & Finance ➔ Renting & Real Estate
You might have better luck posting this under the homework help section, in education.
2006-11-17 10:44:19 · answer #1 · answered by mk 3 · 1⤊ 0⤋
I take it this is a homework assignment, because it makes no sense in reality.
I'm not going to do it for you, but here's how to do it:
Total up the annual rent, subtract the annual expenses, and divide by the amount paid, and you'll get the answer the teacher wants.
The real answer depends upon how much the actual investment is. Nobody with any sense would just pay cash for a million dollar piece of income property, they'd have borrowed most of it.
2006-11-17 18:45:56 · answer #2 · answered by open4one 7 · 1⤊ 1⤋
3 @ 1000 = $3,000
4 @ 580 = $2,320
5 @ 150 = $750
GROSS INCOME = $6,070
1800 per quarter = $600 per month
NET INCOME $5,470 per month
5470/1033950 = 0.00529
Monthly it is .0529%
Annual = 12 * .0529 = 0.063485 or 6.3%,
Not a great return but the value of the building should go up as well. Did he borrow the money? What is the interest rate?
2006-11-17 18:44:56 · answer #3 · answered by gare 5 · 1⤊ 1⤋
4.69%.
2006-11-17 18:49:05 · answer #4 · answered by tianaramal 4 · 1⤊ 1⤋