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 business in which one or more person, with unlimited liability, called general partners, manage the partnership. There are also limited partners who contribute capital, but do not manage ...
Home appraisals are required for many situations in the real estate industry. The most common instances in which any homeowner might be required to do an appraisal are selling your home or ...
refusal of one party to a contract to carrying out his or her responsibilities under the agreement. An example is when a builder refuses to perform previously agreed services for the buyer ...
Rezoning of land from a higher density use to a lower density use. ...
Written agreement, guarantee, pledge, or promise annexed to the land between two or more parties to do or not to do something and is transferred to successive title holders. For example, in ...
History of an individual's credit financial transactions including a detailed payment analysis. The creditor history is critical for performing a credit analysis to develop a credit rating. ...
The definition of a bedroom community, or commuter town in real estate is a unique type of community that merely uses their homes to sleep, while doing everything else offsite. In a bedroom ...
Constructed in place by filling holes drilled through to bearing strata with concrete. ...
That which remains. As applied to real estate, it is the profit derived from rentals after subtracting all operating costs from the gross rental revenue. ...
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