Several years after your initial home purchase, you decide to buy a condo as a revenue property. The purchase price is $220,000 and you are able to put 20% down as a down payment. You arrange for a mortgage with your favorite bank and decide on a closed mortgage, 5-year term, 30 year amortization period with monthly payments and an interest rate of 4.8% APR compounded monthly. The following costs would also be associated with purchasing/owning the condo:

Lawyers fees (onetime fee at purchase): $800

City taxes: $1500 per year

Condo fees: $400 per month

Property insurance: $360 per year.

a) What would be the minimum monthly rent that you would need to charge in order to cover all costs (monthly mortgage payment and costs listed above) associated with the condo? Assume the lawyers fees will be included in your mortgage price prior to placing 20% down.

b) If after 4 years you decide to sell the condo (and are able to do so immediately), what is the balance remaining on the mortgage? If your bank charges a penalty in the amount of (the next) 3 months interest for paying off the mortgage before the end of your term, what would be the minimum sale price that would cover your remaining balance and the penalty?