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
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 ...
(1) The difference between future value and present value of a payment. (2) A reduction in the amount due for early payment. (3) Discount loan. (4) Taking into account all available good ...
A method to estimate the value of a real estate investment, which emphasizes after-tax cash flows and the return on the invested dollars discounted over time to reflect a discounted yield. ...
(1) Methods that involve discounting the future cash flows generated by an income property. These techniques are used primarily for valuation. (2) Methods of selecting and ranking ...
Leasing commercial or industrial real estate can be a perplexing process. As a tenant (and as a landlord,) you must consider several aspects before actually signing the deal. Even top local ...
Charges incurred in making a sale of real estate such as real estate commissions and attorney fees. ...
Conversion of a rental apartment house to individual condominium ownership of a portion of the minimum ownership of a portion of the building. Often, the tenant is given an opportunity to ...
Littoral refers to a piece of land bordering a large body of water that is not moving, such as an ocean, pond, sea, or lake. Many find "littoral" obscure since it's not widespread in ...
Claim by a real estate broker that his or her actions were the principal cause of the completion of a property sale between two parties. A successful procuring cause claim would entitle a ...
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