Question
Before answering this question this is an investment problem that should be solved. You own a four-unit apartment building that generates $3,500 per unit in
Before answering this question this is an investment problem that should be solved.
You own a four-unit apartment building that generates $3,500 per unit in rent each month. Each unit is 3,000 sq. ft. in size and all units are occupied by long-term tenants. You want to redevelop the building to have more units. You have two options: invest $200,000 to convert the building to an 8-unit building or invest $300,000 to convert the building to a 10-unit building. Units in the larger reconfiguration will rent for $2,500 while units in the smaller version will rent for $2,000. A local realtor has promised that she has clients that will immediately rent the apartments upon project completion. It will take 18 months to complete the project and all current tenants must leave if you redevelop. a. Assume you are considering a seven-year investment window, should you redevelop and at what level
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