Leverage In Real Estate Investing
Use of other people's money (OPM) in an attempt to maximize the return but at high risk. The use of leverage in real estate investing is a way to maximize yield on a small down payment. When building real estate wealth, leverage helps one grow fast without extreme risk. High-leveraged investing in real estate is particularly beneficial in a highly inflationary environment. The best scenario is when property values increase on their borrowed fund. Property values can also decrease such as that which occurred in California in the early 1990s. A risk is negative cash flow in which income from highly leveraged property may be inadequate to pay operating expenses, interest, and principal.
Popular Real Estate Terms
The person to receive the benefits of a trust when distribution occurs. Secondary beneficiaries may be nominated if the primary beneficiary predeceased the trust distribution. The ...
The assessment sales ratio is a way of measuring the accuracy of a property’s assessed value when compared to the property’s selling price. This measurement gives the ...
Public record in an assessment district listing the assessed valuation of all its assessed property. ...
Same as term appraisal: Valuation assessment of real property by an expert third party for the following purposes: developing a realistic market price. setting a market value at the time ...
Fee charged by a mortgage lender to a buyer, seller or both for transferring a mortgage when the mortgage property is sold. ...
Additional utility an individual receives when purchasing an additional unit of a commodity or service. Represents a trade off between units of cost and unit of utility. For example, an ...
Style of architecture originating at the German Bauhaus, or architectural institute, in the 1920's associated with the International School of architecture. The Bauhaus style emphasized ...
The definition of adjoining properties describes two or more real estate properties, lots, or parcels that shared a boundary. A property that shares a common border with another is ...
Lender has an equity interest in the property that is the subject of the loan. The lender shares in the increase in market price of the property as well as any net income generated. ...
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