Topic 13: Renting versus Buying 123. Jennifer is choosing between buying a condominium property and renting it. The price for the condo is $157,000. The financing terms, if the condo is purchased, are: LTV = 0.9, loan term = 30 years, interest rate = 5.75%, monthly payments. If the condo is purchased, it is subject to immediate closing costs of $9,420. Further, projected property taxes are $2,400 per year, monthly association fee is $160. If Jennifer decides to sell the purchased condo at some point of time in the future, such sale will be subject to the agent's commission of 7 percent. If a similar condo is rented instead, the current rent is $1,184.59 per month. If instead of buying a condo Jennifer chooses to rent, she will invest money that otherwise would have been spent on condo into stock market. Assume that stock market yields a 9 percent annual return. Compute the profit/loss of buying versus renting for different periods of time spent in the purchased condo until it is sold for two different scenarios of Real Estate Finance
Topic 13: Renting versus Buying 123. Jennifer is choosing between buying a condominium property and renting it. The price for the condo is $157,000. The financing terms, if the condo is purchased, are: LTV = 0.9, loan term = 30 years, interest rate = 5.75%, monthly payments. If the condo is purchased, it is subject to immediate closing costs of $9,420. Further, projected property taxes are $2,400 per year, monthly association fee is $160. If Jennifer decides to sell the purchased condo at some point of time in the future, such sale will be subject to the agent's commission of 7 percent. If a similar condo is rented instead, the current rent is $1,184.59 per month. If instead of buying a condo Jennifer chooses to rent, she will invest money that otherwise would have been spent on condo into stock market. Assume that stock market yields a 9 percent annual return. Compute the profit/loss of buying versus renting for different periods of time spent in the purchased condo until it is sold for two different scenarios of Real Estate Finance
PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN:9781337117005
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter13: Investing In Mutual Funds, Etfs, And Real Estate
Section: Chapter Questions
Problem 9FPE
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