I.D.E.A.L.
Definition of "I.D.E.A.L."
An acronym stating the real estate is the I.D.E.A.L. investment. Each if the five letters in IDEAL stands for an advantage to real estate as an investment. "I" stands for interest deduction. The mortgage interest paid on the first and second residential homes are tax deductible. On the average, real estate is a good hedge against inflation because property value and the income from properties rise to keep pace with inflation. "D" stands for depreciation. The building on your land depreciates in book value each year and you can deduct this depreciation from your investment property and not residential. "E" is for equity buildup. This buildup of a capital asset is like money in the bank. As you amortize a mortgage, the value of your equity investment will steadily rise. In the case of income-producing property, this amortization could mean that your tenants help you build your estate. "A" is for appreciation. Your property value goes up every year, hopefully. Be careful because this is not guaranteed. "L" is for leverage. When you buy a house you make a down payment, say, 10% and you borrow the balance, say, 90%. You get the benefit of 100% even though you put up only 10% of your own money. You can maximize return with other people's money (OPM). The use of a mortgage and OPM means that you can use small amounts of cash to gain control of large investments and earn large returns on the cash invested.
Popular Real Estate Terms
Road or highway acting as a frontage boundary. ...
Writ issued by the court requiring a person to appear as a witness or to provide written information in the case. A contempt of court citation may occur for failure to observe the subpoena. ...
An unpreventable, overwhelming, and irresistible force. It is common to place a force majeure clause in a construction contract to indemnify a construction deadline in the event an act of ...
How much the rental property is worth. The valuation considers the net income derived from the property and a capitalization rate. ...
The result of combining two or more parcels of land so that the one large parcel has more value than the sum of the individual parcels. ...
To clip or prune shrubbery,etc. ...
Legal action between a plaintiff and defendant. ...
Losses arising from damage to or destruction of property. ...
The Women’s Council of REALTORS® is one of the affiliate organizations of the National Association of REALTORS® (NAR). This nonprofit organization is a network of successful ...
Have a question or comment?
We're here to help.