Problem
He is thinking of buying a $40,000 house for investments, using a 60,000 of his own as a down payment, and financing the rest through a 30 year bank mortgage at 3%, resulting in monthly payments and other financing expenses of $ 1,700.00. He estimates that it will cost him about $ 5,000 per year to maintain this property. Your uncle idea is to keep this property for 10 years and sells it then. Based on what sees in that neighborhood, property location, and future developments, he expects that it will be worth at least $70,000 after 10 years at which point the mortgage balance would be $260,000.00. How much would you recommend your uncle rent this house for if he is looking for at least a 25 % return on his investment?