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
The Exclusive Agency Listing is regularly confused with the Exclusive Right to Sell Listing, but they are not the same. True: on both Listings, only 1 Broker or Agent has the right to sell ...
Generally, a legal notice implies a method of official notification to an individual, organization, company, or the public that a particular event is about to occur. We can call a ...
Trying to resolve a problem between two individuals up with some compromise or common ground. It occurs more often during times of poor economic conditions. An example is a creditor ...
(1) Paved roadway constructed above lowlands such as a swamp. (2) Roadway in ancient Egypt connecting the valley temple with a pyramid. ...
The appraisal approach is used to estimate the value of an asset, based on various factors to reach the closest educated guess of the asset. While an appraisal approach does consider the ...
A municipal or county local government board that resolves zoning disputes. ...
Government owned lands, for conservation purposes or for specific uses such as dams and hydropower. Public lands are owned by federal, state, and local governments. Many public lands are ...
Type of ownership by husband and wife, recognized in 27 states, in which the rights of the deceased spouse pass to the survivor. It is the same as joint tenancy, except that one spouse ...
The definition of trade-in in real estate refers to a swap of houses. The trade-in program gives a seller of a property the chance to find an ideal replacement home for their family while ...
Have a question or comment?
We're here to help.