​Bev bought a vacation comdominium as a real estate rental property for $345,900. After a $100,000 down payment, she mortgaged the rest. Her annual expenses totaled $28,760 and she rented the condo for $3975 per month.

​What was the annual rental income?

$3975 x 12 = $47,700

What were the annual expenses? $28,760

What was the annual net income?

47,700 - 28,760 = $18,940

What was the annual yield? (annual net income/cash investment)

18,940/100,000 = 18.94%

Rental Properties

You can choose your own annual yield!

You can determine what yield you want to make and then set the rental amount accordingly. Of course, if you have been paying attention in your Economics class there is this thing called supply and demand.

Desired annual income

This is found by taking the desired annual yield x you cash investment.

If Bev in problem 1 wanted an annual yield of 25% what would be her desired annual net income?

25% x $100,000 = $25,000

Monthly Rent

​$4480 per month

Do page 464 #7-13 on paper. Get 'er done!