Suppose the annual rental income is $12,000. We subtract the estimated, long term
maintenance expenses. Examples include carpet cleaning, appliance repair/replacement,
flooring etc. Suppose the annual maintenance expense is $1000.
From the remaining $11,000 we subtract the annual mortgage payments, property tax
and HO insurance. This is the net gain/loss under rent option.
Due to possible future movements in property value, the gain/loss also depends on
geography of the property and market conditions. We therefore provide a statistical
range for net gain/loss under three scenarios: “Low, Average and High”.
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