Leverage In Real Estate Investing
Use of other people's money (OPM) in an attempt to maximize the return but at high risk. The use of leverage in real estate investing is a way to maximize yield on a small down payment. When building real estate wealth, leverage helps one grow fast without extreme risk. High-leveraged investing in real estate is particularly beneficial in a highly inflationary environment. The best scenario is when property values increase on their borrowed fund. Property values can also decrease such as that which occurred in California in the early 1990s. A risk is negative cash flow in which income from highly leveraged property may be inadequate to pay operating expenses, interest, and principal.
Popular Real Estate Terms
A contract not in writing. Oral contracts are legally enforceable except for those applicable to the sale of real estate. ...
Any commercially fabricated and widely available product designed for household and personal use. Consumer goods are available in an open market place and are competitively priced. ...
Principle stating that the joint tenants must have equal rights to possession of the whole property. ...
Doing business as, or DBA, means an official moniker for your enterprise or company. Regularly, a DBA is a state certificate serving as a registration name and issued under a ...
Meaning or definition given to an act, fact. Or thing through legal or juridical interpretation. ...
A capital asset. An expenditure to buy property and other capital assets that generate revenue. Securities of real estate companies. ...
Older property is bought usually by a governmental agency to be modernized and improved. In many cases, the deteriorating property is torn down and a new structure built. An example is ...
How many days, months, or years are required before a new building has the desired occupancy ratio. The occupancy rate influences the amount financial institutions are willing to lend. ...
Dividing a lot into two or more parcels. Normally a variance would have to be obtained to permit a lot split. The lot cannot be split unless they meet minimum area zoning requirements ...
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