Answer: 10%
If 12 apartments will be rented out monthly: 3 @ $600 will earn 1800, 3 @ $750 earns 2250, 3 @ $800 earns 2400 , and 3 penthouses @ $1000 earns 3000. Accumulated rentals in one month is $9450, in one year is $9450*12=$113,400.
The group has a 7% vacancy rate (113,400*.07= 7,938) and expenses of $9,490.
The annual earnings of this building is computed as:
113,400-7,938-9,490
$95,972
If the apartments were bought at $872,473, the annual rate of return is:
95972/872473
10.99=
10%
