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SUPPOSITIONS
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| Cost of house with land and pool for example |
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$325,000.00 |
| Average rental capacity as achieved in Las Terrenas2002-2003 |
|
24 weeks |
Average weekly rental for this type and class of villa
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| Management charges for the villa including |
per month |
$250.00 |
| Management of cleaning services |
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| Management of pool maintenance |
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| Reception of clients at the airport and transfer to the villa |
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| Rental at preferential rates of a car or quad |
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$US |
$US |
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|
Net |
Purchase |
Term |
Balance |
|
Rental income |
Balance |
| Year 1 |
$325,000.00 |
|
$30,600.00 |
$294,400.00 |
| Year 2 |
$294,400.00 |
carried forward |
$32,130.00 |
$262,270.00 |
| Year 3 |
$262,270.00 |
carried forward |
$33,736.00 |
$228,534.00 |
| Year 4 |
$228,534.00 |
carried forward |
$35,423.00 |
$193,111.00 |
| Year 5 |
$193,111.00 |
carried forward |
$37,194.00 |
$155,917.00 |
| Year 6 |
$155,917.00 |
carried forward |
$39,054.00 |
$116,863.00 |
| Year 7 |
$116,863.00 |
carried forward |
$41,006.00 |
$75,857.00 |
| Year 8 |
$75,857.00 |
carried forward |
$43,056.00 |
$32,801.00 |
| Year 9 |
$32,801.00 |
carried forward |
$45,209.00 |
-$12,408.00 |
It is true to say that there are some factors not
taken into account in the above which are
A) House and pool cleaning
B) General maintenance costs repainting etc
C) Insurance
However we have not mentioned the expected
value of a property such as this villa which, in seven years time,would
be in the order of $750,000 assuming only an 8% per year increase
against an actual current 10-12%.
Purchase price
|
$325,000.00
|
increase 8% P A
|
$353,260.87
|
Year 1
|
| |
$353,260.87
|
|
$401,432.81
|
Year 2 |
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$401,432.81 |
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$456,173.64
|
Year 3 |
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$456,173.64
|
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$518,379.14
|
Year 4 |
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$518,379.14
|
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$589,067.20
|
Year 5 |
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$589,067.20
|
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$669,394.55
|
Year 6 |
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$669,394.55
|
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$760,675.63
|
Year 7 |
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$760,675.63
|
|
$864,404.12 |
Year 8 |
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$864,404.12
|
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$982,277.41
|
Year 9 |
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$982,277.41
|
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$1,116,224.33
|
Year 10 |
Effectively this asset, a villa with a value of $980,000.00
would be yours in nine years and the rental return would have made
the purchase for you. Therefore for an initial investment of $325,000.00
you should have a return of over $980,000.00 in the next nine years
tax free. Plus the use of a luxury holiday home for you and your family.
Note
The rental income will be affected if you take up all the major holiday
weeks yourselves.
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