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 right or interest in property held by a third party, which often limits the use and diminishes the value of the property, but usually does not prevent the transferring of title. The more ...
Amount paid to a person or business for bringing the parties together in a business arrangement. The finder may also act in a consulting capacity. The fee may be a flat amount or rate, a ...
The two terms used to describe professionals in the real estate industry are “realtor” and “real estate agent”. These two terms are used interchangeably or as ...
Approach to valuing property based on its replacement cost. The cost of each major element of the property per square foot is added together and multiplied by the total space to estimate ...
People can use the term disclosure in ordinary day to day activities. The definition of disclosure is to expose yourself, to show the truth without omitting any important information. ...
Same as term closing: legal process of transferring a piece of real estate to a buyer. Typically it occurs in the office of the lender, attorney, or an escrow company. ...
Transfer of personal property via a will as a gift to the recipient. ...
real property located in a metropolitan, heavily populated area. ...
Geographic area that is attractive to prospective tenants. Square footage in an office building or apartment house that may be rented by a tenant. ...
Have a question or comment?
We're here to help.