Project A: The investor buys a block of flats for £900, 000 by making a down payment of £150,000 and taking an interest-
Posted: Wed Mar 16, 2022 9:12 am
- Project A The Investor Buys A Block Of Flats For 900 000 By Making A Down Payment Of 150 000 And Taking An Interest 1 (29.23 KiB) Viewed 35 times
caculation.
Project A: The investor buys a block of flats for £900, 000 by making a down payment of £150,000 and taking an interest-only loan for two years for the remaining £750,000 (i.e., they pay interest on the loan and will repay the capital at the end). The interest rate on the loan is 10% payable monthly, so the investor has to pay £6, 250 at the end of each month. In return, they receive £5,000 at the end of each month in rent. In addition, the investor has to pay £10,000 in taxes at the end of the 6th month, and £15,000 in taxes at the end of the 18th month. Two years after the initial purchase, the investor sells the block of flats for £975,000, out of which she uses £750,000 to repay her loan.