Upside Potential
In general terms, the upside potential signifies the potential of a present investment, be it an asset or property, to bring a profit for the investor in the future. This measure enables companies and individual investors to decide whether purchasing or financing a project is worthwhile.
You can encounter one example in the financial world in the form of securities and stocks. Upside potential is a potential gain you can expect from security (equity, debt, and derivatives.) For instance, a financial analyst will advise you on buying stock trading at $20 per share. Still, the same stock has an upside potential of $27 later. Certainly, there’s no certified guarantee that the estimated growth in value will occur.
Upside potential in real estate
Upside potential in terms of real estate means the best-case scenario investment-wise. It defines an approximation of the possible appreciation of value in real estate. The local assessor would consider several factors in evaluating the upside potential in your property value. Thus, they will assess your location, nearby amenities, and a potential increase in rental income. Even home security can affect property value. Government developments in the area can significantly affect future real estate investment appreciation.
We recommend following local real estate agents’ lead when they say a property has upside potential. It is a term that every homebuyer should know. When appreciating a house, expert realtors refer to the possibility of gaining profit in the future based on the present evaluation of the said real estate and its neighborhood.
Incurable depreciation
People often mistake incurable depreciation and believe it’s the exact opposite of the meaning of upside potential. However, depreciation doesn’t define a drop in value. The term means the repair expenses are higher than the property’s actual value. In other words, that’s how professional assessors communicate with the homeowner that it is not worth spending money on property renovations. Unfortunately, even home inspectors miss certain real estate aspects that can be costly. To dodge the devaluation of your property, you should take essential preventive measures.
Downside risk
The opposite of upside potential is downside risk, which approximates the possible comparative decline in property value. Real estate investors always evaluate individual properties in terms of the upside potential compared to the downside risk.
Popular Real Estate Terms
Term given to two depreciation systems defined by the Internal Revenue Service: The main system is called the General Depreciation System (GDS). Under GDS, most property is assigned to ...
One-story house with a low pitched roof often having an open floor plan. ...
Geographic area that is attractive to prospective tenants. Square footage in an office building or apartment house that may be rented by a tenant. ...
Partnership agreement where the parties consent to purchase the interest of those leaving the partnership while those leaving similarly consent to sell their interests to agreement for a ...
Situation in which an owner of property sells the property to an investor and then leases the property back, usually for a 20- or 30- year term. ...
Land located next to water that has and will continue to experience water damage. The land generally is not suitable to build a structure on. In some cases, federal or local government may ...
Situation in which very few prospective buyers of real estate are rejected by lenders. This may be due to ample money supply, lower interest rates, and/or relaxed credit standards. See also ...
A court order on an issue directly related to the immediate action. ...
Wall having an air space between the two sides. A hollow wall is often covered with wallboard that is nailed to the wall studs providing an air space between the two sides. ...
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