How much equity do you need to purchase the property

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Question: Calculating Your Equity Need- local bank

Calculate for both Fairfield and Columbus:

Fairfield 500,000 House (CAP rate or 8%)

Columbus 300,000 House (Cap rate of 4%)

Assume for the purposes of this question that the price you are paying for this property is the value that you calculated using your assumed cap rate. Also assume that you could only get the â€œ70%â€ loan from your local banker with a 5% interest rate and 25 year amortization. Assume you have no other transactional costs other than purchase price (note: this is not realistic, but ok for these purposes). How much equity do you need to purchase the property? Show your work.

Reference no: EM132213369

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