What is expected horizon yield for real estate investment

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Reference no: EM131069145

You own an apartment complex made up of 10 units each of which is rented out at a monthly rent of $1000. You purchased the facility 2 years ago for $1,000,000, and plan to hold the complex for another 8 years at which time you expect to sell the facility for $1,800,000. Assume your costs of operation for the complex (upkeep, property taxes, employee wages, etc.) amount to $7,500 per month. If you expect to reinvest any cash flows (net income) from the apartment complex at an annual reinvestment rate of 6.0%, what is your expected Horizon Yield for this real estate investment? (Assume a monthly reinvestment of net income payments over the year.) Please explain how you get answer.

Reference no: EM131069145

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