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
Method of finishing edges of walls, window jams, doors, or projections with decorative strips of wood to give a better appearance as well as providing protection from jagged edges and ...
Some plausible, but not completely clear-cut indication of ownership rights. It supplements a claim to title to property, but does not actually establish it. ...
The result of an act or a fact. ...
In insurance, charging the lowest rate accorded an insurance policy covering a minimum risk classification situation. For example, a homeowner's insurance for a home located within 500 feet ...
Tables used to compute the monthly mortgage payment that consists of principal repayment and interest. A loan amortization type of formula is used. The tables have monthly payments for any ...
The value of property subject to tax. The tax equals the tax rate multiplied by the property's value. ...
In order to define allotment, we have to take into consideration what it refers to. While generally, it refers to a certain amount of something that is allocated to a particular person, the ...
The term apartment is used when referring to a type of residential unit that is self-contained and occupies only a part of the building. Through self-contained, we understand that the ...
Range reconnaissance, or surveying, for the purpose of preparing grazing capacity estimates. There are two parts to a range survey: mapping of grazing cover varieties and associated ...
Have a question or comment?
We're here to help.