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
Room containing a toilet and wash basin, but does not include a shower or bath tub. ...
The addendum definition is an attachment, clause, or section added to an agreement or contract specifying additional terms, conditions, or requirements to the original agreement or ...
The closing process is the final step of a property sale. It starts when the home seller agrees to the home buyer’s offer and it ends after all Closing costs are paid ...
Short-term leases are leases that run its completion in a faster time than regular ones.In real estate, short term-leases usually refer to temporary housing; that is: rent.The length of a ...
Clay-baked, glazed piping that is not damage by water. It is often used in underground drainage. ...
Valuation method for land or improvements to property. It takes into account gross rentals less operating expenses. ...
Nonload bearing layer of brick covering a wall of decorative purposes only. The wall is usually constructed of wood framing or masonry block. ...
Proposing or presenting for acceptance a price for a property parcel. Evidence of willingness to enter into a sales agreement. The bid price in a real estate or security ...
Rooflike cover that extends over any place to provide shelter from the sun, rain, or wind. ...
Have a question or comment?
We're here to help.