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
Actual notice to one or more individuals to cease and desist from performing a particular action. For example, a homeowner begins constructing several new rooms onto an existing house ...
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 ...
To confirm, ratify, verify, and accept a transaction that can be canceled. ...
The definition of net sales price in real estate is the combined total cost to the buyer of a listing, excluding any auxiliary costs such as the sales fee, appraisal fee, real estate agent ...
The most common definition of economies of scale refers to the decrease in production costs of a single item due to a business enterprise’s expansion. In short, mass production can ...
That which remains. As applied to real estate, it is the profit derived from rentals after subtracting all operating costs from the gross rental revenue. ...
The definition of a master planned community in real estate is a community planned from the ground up with the purpose of being as convenient, aesthetically appealing and luxurious as ...
Incontrovertible reality forcing a judge in a trial to find evidence to the contrary unsupportable. ...
Cash payment to a lender so as to lower the interest rate on a loan a borrower must incur. The lower rate may apply for all or a part of the loan term. ...
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