Susan recently purchased a home for $150,000. She plans to rent it out for $1,000 per month for a year. Had the house cost $200,000 instead, her expected rate of return would have

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The rate of return is calculated as (Annual Rent / Purchase Price) * 100. For a $150,000 house, the return is ($12,000 / $150,000) * 100 = 8%. For a $200,000 house, the return is ($12,000 / $200,000) * 100 = 6%. The rate of return decreases by 2 percentage points.

Susan Recently Purchased a Home for $150,000