Property in order to generate a positive IRR

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Reference no: EM131525052

You are deciding whether to own or rent a single family residence. You could rent the property for $3,100 a month, or you could buy the property for $550,000 and finance it with a 70% LTV fixed-rate fully amortizing 30 year mortgage at 4%. You expect an annual appreciation rate of 3%, maintenance and insurance at currently $2,500/year and increase by 2% a year, you have a 33% marginal tax rate Selling costs would be 7% of the sale price and property taxes are 2% of current property value.

How many years would you need to own this property in order to generate a positive IRR?

Reference no: EM131525052

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