You want to invest in a residence, the total cost of the house is 230,000 USD. All but 30,000 will be mortgaged for a term of 20 years with monthly payments of 1,500 USD through an international credit.

The house is bought with the planning of selling it at the end of the 7th year after the purchase, the price at the end of the 7th year is estimated as 230,000*(1+g%)^t, where g% is the annual appreciation of the market, t is the time in years between the purchase and sale of the house, the value g% varies between 1% and 5%.

In addition, it is intended to generate income from the rental of the house during this period (7 years), an agency promises a rental payment of USD 1,500 per month for the first 2 years, USD 1,650 per month for the next 2 years and USD 1,850 during the next two years. last 3 years.

The cost for the management of the real estate agency is one month of rent per year, that is, the 12th month will not be received, because it is what the agency charges for the management

Additionally, the maintenance of the property will be USD 150 per month for 7 years, this value is paid at the beginning of each month.

An annual rate of 8% is established with monthly capitalization, as an investment alternative.

Analyze and answer the question

How do we make our decision based on rental income, maintenance expense and sale of the residence? Is the purchase of the residence appropriate, what courses of action should be selected?

This is what I did, but I really don't know if what I did is right, please can you help me.

Rental payment for the first 2 years = 2 x 12 = 24 months

Income = 24 x 1500 = 36000

Management = 2 x 1500= 3000

Total income = 36,000 - 3,000 = 33,000

Rental payment 2 years = 2 x 12 = 24 months

Income = 24 x 1650 = 39600

Management = 2 x 1650= 3300

Total income = 39600 - 3300 = 36300

Rental payment 3 years = 3 x 12 = 36 months

Income = 36 x 1850 = 66600

Management = 3 x 1850 = 5550

Total income = 66600 - 5550 = 61050

Now the total rental income is = 33000 + 36300 + 61050 = 130350 USD

The maintenance is 150 for 7 years = (7 x12) X 150 = 12600

What it generates in 7 years is: 130350 - 12600 = 117750

Now, you will mortgage 200,000 USD at a 20-year term with monthly payments of 1,500

Now: 1500 x (20x12) = 1500 x 240 = 360,000, this means that for the 200,000 USD that the mortgage ends up paying 360,000

The appreciation of the house is 230000*(1+g%)^t. With g% varying from 1% to 5%

And it says that it has an annual rate of 8% monthly capitalization (I don't understand what it means)