Assume you can purchase a 3 bedroom rental townhome for 350,000. The down payment required is 15%. You finance the remaining amount with a 5% 30 year fixed term loan. You estimate the your annual property taxes will be $1350 and your annual homeowners insurance expense will be $800. You plan on charging $1950 per month in rent. You plan to sell the property in 13 yrs for $435,000. The appropriate inflation adjusted discount rate is 3.2% per annum. What is the NPV of this rental?

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Loans

A loan is a term that we are all familiar with. The processing of loans is one of the most important functions of a bank. It keeps our economy stable and facilitates the implementation of monetary policies. Let's take a look at the different forms of loans and get some answers to some common questions.