You are considering the purchase of a distressed property. The price is $115,000, and you believe...

You are considering the purchase of a distressed property. The price is $115,000, and you believe that you can complete the required repairs and renovation and re-sell the property in twelve months. You can finance the purchase with a $97,750, 6.5% interest-only loan. The costs associated with acquiring the property include legal fees of $950, an inspection fee of $600, $5,500 to pay off an existing lien, and loan closing costs of $3,500. A thorough and careful assessment of the work required results in an estimated total repair and renovation cost of $22,500. The necessary insurance coverage will cost $1,800 per year. You anticipate paying a broker commission of $3,500 upon sale of the property. If you require a return on investment of 25% for such a deal, what price would you have to realize after twelve months to make this a desirable venture?

Expert Solution

Ans : Final Sale Price = $171,276.24

jeff jeffy answered 2 years ago

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