Comparing Real Estate Investments Suppose Vicky wants to invest in real estate and is considering two different residential properties. Based on the expected incomes and operating expenses of each, she estimates that the first property (property A) has an NOI of $43,000 and that the other (property B) has an NOI of $32,000. If the cap rate is 9%, property A has an estimated value of and property B has an estimated value of . In deciding between these two properties, it is important for Vicky to consider other factors. For instance, in general, only seasoned investors should invest in property. Alternatively, Vicky might want to consider investing in a real estate investment trust (REIT), a type of investment company that operates similarly to mutual fund. Which of the following statements regarding REITS are true? Check all that apply. They pay dividends. They can increase the diversification of individuals who are already invested in the stock market. Income distributed from REIT investments is taxed at 15%. The value of REITS tends to move in the same direction as the general stock market.

Comparing Real Estate Investments Suppose Vicky wants to invest in real estate and is considering two different residential properties. Based on the expected incomes and operating expenses of each, she estimates that the first property (property A) has an NOI of $43,000 and that the other (property B) has an NOI of $32,000. If the cap rate is 9%, property A has an estimated value of and property B has an estimated value of . In deciding between these two properties, it is important for Vicky to consider other factors. For instance, in general, only seasoned investors should invest in property. Alternatively, Vicky might want to consider investing in a real estate investment trust (REIT), a type of investment company that operates similarly to mutual fund. Which of the following statements regarding REITS are true? Check all that apply. They pay dividends. They can increase the diversification of individuals who are already invested in the stock market. Income distributed from REIT investments is taxed at 15%. The value of REITS tends to move in the same direction as the general stock market.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Need help with this real estate question.
You have saved $50,000 to use as a down payment for some property and to build a home. The home is in a prime building location that has trees and a stream running through the property. The clearing of the land and the building of the house will cost a total $650,000. a) How much money will you need to borrow through a mortgage for your home? b) The bank offers to finance your purchase with a 25-year amortized mortgage with a 5-year term at 4.125%. If you want to make monthly payments on this loan (end of each month), how much will each payment be? c) Prepare an amortization schedule for your first 3 mortgage payments d) At the end of the 5-year term, the mortgage terms allow you pay down an additional 10% of the original mortgage amount and the terms allow you to change the remaining amortization period. You have saved the additional money to pay down the amount of the loan (additional 10% of the original mortgage amount) and you want to shorten the remaining amortization by 5 years.…
Suppose you are a cashed-up real estate investor considering purchasing an investment property in Brisbane to buy and then rent out. a) Find a two-bedroom apartment that is advertised for sale (provide a web link to the example). Given the listed (or estimated) sale price of this apartment (use apartment with price of $670,000), what would be the minimum rental income that would make it profitable to invest in this apartment? Make and state your assumptions (e.g., interest/discount rates, maintenance costs). b) Suppose interest rates went up. Would you now be willing to pay more or less for the same property?

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