Harry is looking at buying a building that has a monthly income of $3,600, a 5% vacancy rate, and annual expenses of $8,640. he is expecting a 12% return on his investment. how much should he pay for this building?

Question

Malaki Bentley

Business

13 June, 15:20

Harry is looking at buying a building that has a monthly income of $3,600, a 5% vacancy rate, and annual expenses of $8,640. he is expecting a 12% return on his investment. how much should he pay for this building?

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Answers (1)

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Kara Neal · Answer 1

The gross income is $3600,

Minus the vacancy rate, 3600 * 0.95 = 3420

Minus the monthly expenses; 3420 - (8640/12)

= 2700

Since, He is expecting a return of 12 %, then,

2700 divided by 0.12 (12%)

= $ 22,500, would be the value he should pay for this building.