Planning for the Future How you spend and invest your money can have an impact on your lifestyle at a later time. What might you want to start saving for in the near future?

Lesson Objective Content Vocabulary Compute the annual net income, the annual yield, and monthly rent to charge on an investment in real estate rental property. Content Vocabulary rental property Real estate available for or being rented and an alternative to investment opportunities available at financial institutions. rent Agreeing to pay a set fee for the use of property, such as a vehicle or building, often on a daily, weekly, or monthly basis. rental property rent

Example 1: Nadine Hobart purchased and older, two-bedroom, one bath home for $87,500. She made a $27500 down payment and mortgaged the rest. Her annual expenses for mortgage interest, taxes, repairs, insurance, and depreciation totaled $6490. Nadine rented the house for $795 a month. What is the annual net income? What is the annual yield?

Step 1: Find the Annual Net Income Annual Rental Income – Annual Expences

Step 2: Find the Annual Yield Annual Net Income Cash Investment

Example 2 If Nadine in Example 1 desired a 15% annual yield, rather than the 11.09% she is now getting, what monthly rent would she have to charge?

Step 1: Find the desired annual income Desired Annual Yield X Cash Investment

Step 2: Find the monthly rent Desired Net Income + Annual Expenses 12