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
Holding pool of mortgages. It is marketed as a tax exempt mortgage backed security for investors. ...
Condemnation is a process by which private property is taken for the purpose of public use. Prior to the taking, the property is said to be “condemned property”, meaning that it has ...
Style of architecture introduced into America prior to the Civil War and modeled after Renaissance Country homes in northern Italy. They were usually relatively large brick houses. Italian ...
Building a structure in such a way as to reduce the process of destruction in the event of fire. Fire-resistant materials are used. ...
The American Real Estate and Urban Economics Association (AREUEA) is a non-profit association founded in 1964, during the Allied Social Science Association located in Chicago. Important to ...
Section of the Internal Revenue Code applies to assets used in a trade or business,. In general, gains on section 1231 assets are taxed at capital gains rates, and losses are considered ...
A mortgage loan where the bank provides the mortgagor the required funds to purchase property the bank has obtained through foreclosure on outstanding mortgages. For example, John obtains a ...
The term “property title” is relatively common and often used in the real estate industry, which is why it’s useful to know what it really means. While the term itself is ...
List of architectural design items needing to be corrected and resolved prior to finalizing a building design. ...
Have a question or comment?
We're here to help.