You have decided to buy a small apartment building for $130,000 near a local col

Question

You have decided to buy a small apartment building for $130,000 near a local college. You used $15,000 as a down payment and obtained a mortgage from a local bank for the remaining $115,000. The annual mortgage payment to the bank is $13,500. You expect that the annual maintenance on the building and grounds will be $7,000. There are four apartments (two bedrooms each) in the building that can be rented. Assuming 100% occupancy all year, how much rent per month must you charge in order to break even, such that your revenue equals your expenses each month. (Enter your answer as a number without the dollar sign.)

Explanation / Answer

annual mortgage to bank is 13,500 therfore monthly mortgage to bank is $13,500/12 = $1125

Annual maintenance of the building is $7000 therfore monthly maintenance is = $7000/12 = $ 583.33

therfore the rent that must be charged to break even point = $1125+$583.33 = $1708.33 for four apartments

therefore for each apartment the rent will be $1708.33/4 = $427.08 approximately $427

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