Question: A condo is currently valued at $ 1 5 0 , 0 0 0 . The financing terms, if the condo is purchased, are: LTV

A condo is currently valued at $150,000. The financing terms, if the condo is purchased, are: LTV =0.8, loan term =30 years, interest rate =6%, monthly payments. If the condo is purchased, it is subject to immediate closing costs of $5,000. Stock market expects to return 5% per year. What is the profit of buying versus renting in year 3 assuming annual increase in condos value of 3% and brokers commission at sale of 4%? Ignore monthly rent, property taxes and condo association fee.

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