Question
I am considering buying an apartment building and renting the units out to students. Should we invest? Here are some details: The building has 60
I am considering buying an apartment building and renting the units out to students. Should we invest? Here are some details: The building has 60 units. Each unit will rent for $500 per month. Utilities and maintenance costs are $300 per month. The building is listed for sale at $1.5 million. Assume the entire cost of the building can be places into a CCA class with a CCA rate of 4%. Assume the building will last forever. For simplicity, assume all the operating cash flows are received at year-end. Use a discount rate of 8% and assume taxes are 20%
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