Problems

1. Using the following data

Property Located at Sunrise, FL

Property Price$399,900.00

Monthly Rent$2,600.00

Principal & Interest$1,616.00

Property Tax$420.00

Home Insurance$150.00

HOA Fees$50.00

Depreciation Rate$0.0363

Depreciation$14,540.36

Closing Cost$10,517.00

Salvaje Cost$276,293.07

2. Estimate the annual cash flows for year 0, 1, 2, ... till the year you expect to sell the property.

3. Estimate the cost of capital to finance your investment. (assume you put a 20% cash down payment and get a mortgage loan for the rest 80%)

4. Calculate the net present value of the investment and comment whether the rental property you choose is a good investment or not.

5. Discuss the pros and cons of rental property investing.