Ben has a small condo, if he sells the condo now, he will probably get $...

Ben has a small condo, if he sells the condo now, he will probably get $ 225,000 for it. If he waits for 3 years from now, based on the trends in the real estate market he will probably receive more, may be $275,000. If Ben sells the house now, he can invest the money in a special saving account that pays 0.25% interest per month. Knowing that he is planning to relocate after 3 years and will hence need to cash on his investment. That is, he will need as much money as he can get. If he sells the house now, he will pay monthly rent of $1,100 for the next 3 years. If he keeps the condo, he will need to pay $900 per month in interest and property taxes. What would be the more economical option for him?

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Expert Solution

if sell the house now.....

Received $225,000 and invest it @0.25% per month i.e. = $562.50 per monthSo total Income = $20,250

and pad the monthly rent $1,100 so total rent = $39,600

So Net cost = $19,350

If sale after 3-Years so Gain $275,000 - $225,000 = $50,000

but Monthly interest and property tax cost = $900 x 36 = $32,400

Net Saving = $17,600

So it is advisable to sale after 3 year.

jeff jeffy answered 2 years ago

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