Quote:
Originally Posted by OracleOfCalgary
Sure, lets value a condo like we value any other investment. My girlfriend has been told she can rent her place for $1700. Units in her building sell for over $400,000.
Income (Rent) $1700
Expenses (Condo Fees) $200
Net Income: $1500
Annual Income: $18,000
Required Rate of Return: 10%
Valuation: $180,000
Looking at this another way:
Annual Income: 1500 x 12 = $18,000
Annual interest on $425,000 @ 6% = $25,500
... No chance of ever making a profit!
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How are you coming up with a valuation of $180k? With no time period defined I assume you're not present valuing anything?
Also don't forget taxation: Your "loss" of $7,500" is approximately halved when you take into account the deduction that's created.