Question
You own an apartment complex made up of 10 units each of which is rented out at amonthly rent of $1000. You purchased the facility
You own an apartment complex made up of 10 units each of which is rented out at amonthly rent of $1000. You purchased the facility 2 years ago for $1,000,000, andplan to hold the complex for another 8 years at which time you expect to sell thefacility for $1,800,000.Assume your costs of operation for the complex (upkeep, property taxes, employeewages, etc.) amount to $7,500 per month.If you expect to reinvest any cash flows (net income) from the apartment complex atan annual reinvestment rate of 6.0%, what is your expected Horizon Yield for this realestate investment? (Assume a monthly reinvestment of net income payments overthe year.)
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