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
model depicting on paper what a structure physically looks like. The dimensions are draw on a proportionate basis to the real thing. An example is a scale of an existing or proposed office ...
The unadjusted basis of assets is the actual price paid for purchasing an asset without any reductions from depreciation deductions. In order words, the unadjusted basis is an asset’s ...
Giving of a promise or guarantee to the receiver to instill confidence. ...
Deed used to transfer property rights to a governmental authority. ...
The definition of the term right of way is an easement or the right of another person to pass over land owned by someone else to reach a particular destination. An individual is typically ...
Market price pf all the property prior to a condemnation proceeding. ...
Action that is beyond that allowed legally. Examples are charging illegally high interest rate on mortgages and real estate exceeding the amount permissible by legal statute, and a real ...
The occupancy ratio is the ratio of rented or used space to the total amount of space available. An occupancy ratio or occupancy rate is used by analysts when hospitals, senior housing, ...
The term actual notice is used most often in connection with property law, but the concept can also be applied in other law areas. To define actual notice, we can look at the two major ...
Have a question or comment?
We're here to help.