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
Ownership rights to the minerals or other precious resources, such as petroleum, in one's property. A property owner having the mineral rights to the property can do one of three things ...
People often need help understanding the difference between offeror vs offeree in real estate. A rhythm sets the stage from the first step in real estate transactions. It's the interaction ...
Through real estate properties, many individuals of varying degrees of expertise find ways to make money. The real estate industry allows these practices as real estate properties are ...
Loan guaranty program included in the Servicemen's Readjustment Act of 1944. Its provisions cover the compensation to lenders for losses they might sustain in providing financing to ...
A mortgage on which the interest rate is constant, but the payments are structured to increase, so the loan is paid off much earlier. ...
(1) Voiding an order to buy or sell real estate. (2) Prematurely terminating an insurance policy. (3) Voiding a negotiable instrument by nullifying or paying it. ...
Giving one's approval to another, e.g., a fiduciary, to manage his or her finances. ...
The direction in which a community is growing. Directional growth is measured over time, and its path strongly influences current and future market values of those properties clearly in ...
Civil rights acts passed by the U.S. Congress includes those of 1866, 1870, 1871, 1875, 1964, and 1968. The first two acts gave blacks the rights to be treated as citizens in legal actions, ...
Have a question or comment?
We're here to help.