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
British thermal unit-a unit of energy associated with the creation of heat. Prior to 1929, it was defined as the amount of heat required to raised the temperature of 1 pound of water 1 ...
A zero lot line is a term in residential real estate that refers to houses that are either very close to or at the edge of the property line. These houses are also called zero lot line ...
People often use the term in their everyday discourse, yet many wonder what the meaning of common law genuinely implies. Common law refers to a system of jurisprudence based on court ...
Same as term industrial park: Usually a fairly large site zoned and planned for the purpose of industrial development and located outside the main residential area of a city. Industrial ...
Visible area that can be readily seen by outside traffic. This is particularly important for a commercial business. ...
A charge based on the asset value of a real estate security portfolio to manage it. For an open-end mutual fond, the management charge is included in the selling cost of the security. ...
Property deriving at least 75% of the income from personal residences. ...
A situation where a real estate company spends more money than it receives within a stated period of time. This is an unfavorable situation that may result in financial difficulties. A ...
A report required by the Interstate Land Sale Act for the sale of subdivisions having 50 or more lots. It is filed with the Federal Department of Housing and urban Development's Office of ...
Have a question or comment?
We're here to help.