Rate of Total Return (business)
Roberto and Talia Luongo are considering the purchase of a condominium as an investment. The purchase price of $145,000 includes major appliances. They would pay 30% of the purchase price using their own money and borrow the remaining 70% on a mortgage loan. They should be able to rent the condo for $850 per month. Their expected expenses are: property taxes of $1800 per year, strata corporation (maintenance) fees of $130 per month, and mortgage interest of $6160 in the first year. What will be the Luongo's rate of total return (on their own money) during the first year if the property decreases in value by 2%?
Formulas (in case u need them)
I need to find the capital gain yield + Income gain yield in order to find the rate of total return.
Answer is -5.10
:confused: :confused: :confused: