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
The act or removing or dispossessing or expulsion of an individual from a premise by force or law. ...
Insurance protection for the replacement cost of damaged property. Thus, the accumulated depreciation is not subtracted in determining the amount of reimbursement. ...
Simulation that enables investors to determine variations in the rate of return on an investment property in accordance with changes in a critical factor. It is an experiment with decision ...
English architecture. This style has two levels with the second level typically overlaying the first story. The roof is high and the chimney is sculptured. ...
Decline in value of real estate property because it is near something which is damaging to its worth. For example, a house located next to a pollution treatment center, drug center, or ...
Obtaining all the money needed for a real estate project's development. The acquirer/developer does not need to give any of his own funds for upfront costs. The developer also does not have ...
Extent to which soil has cavities or pores, thereby allowing water to pass through. soil productivity;Ability of the soil to accomplish the desired objective such as its capacity for ...
Right to enter and start construction or furnishing property that is in the process of being purchased. ...
Detailed financial accounting of all the credits and debits for the buyer and seller upon consummation of a real estate sale. ...
Have a question or comment?
We're here to help.