Assume you buy your house today with a fixed rate interest only loan, and keep the property indefinitely.

(a) If you buy this property at the asking price, what is the NPV of your investment with 6% after tax discount rate?

(b) What is the IRR?

Property Details

Bedrooms 3-4

Bath 2

Sq. Footage 2,000.00

Lot Size 5,000.00

Avg. Rent 6,500.00

Avg. Sale 1,500,000.00

Assumptions

Rent Inflation 3.00%

Maintenance 1.00%

Maintenance Inflation 1.00%

Property Tax 1.25%

Property Tax Inflation 2.00%

Closing Costs 1.00%

Required Rate Return 6.00%

Down Payment 20.00%

Interest Rate Mortgage 3.50%

Federal Tax Rate 35.00%

State Tax Rate 9.30%