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
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Arrangement the insured and insurer share on a proportional payment for a loss. ...
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In appraisal jargon, property currently being appraised. ...
Legal proceeding to exercise a right in a disagreement between private individuals or businesses. One party seeks a remedy against the other. It does not involve a criminal situation. ...
Dry ravine formed by water runoff. ...
In an electrical system, the connection box where all the circuit systems are installed with a series of electrical breakers. The major distribution or collection duct in an ...
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