A to Z of property investing
Updated: Apr 4
If you're a property investor or have been researching the game for a while, you'd know that there's plenty of terminology to wrap your head around. Whether real estate investing comes naturally, or it doesn't - that's alright! Just like with any topic in life, you can't be expected to know absolutely everything.
In this article, the team at Real Estate Investment Finance will share a basic property investment glossary. This will help you to get ahead and level up as a property investor.
overtime certain assets increase in value. This can be applied to real estate or your rental properties
when someone invests in a single unit or apartment of a strata building, they may be required to pay a fee which makes up the administration and upkeep of the entire complex
a term used to explain the gain investors incur when they sell a rental property, in comparison to the price they originally purchased it for
Cash flow positive:
when cash incomings are more than the value of outgoings once tax-deductible items on an investment property have been claimed
opposite to appreciation, this term is used to explain the decrease in value of an investment property or its fixtures and fittings over time. It can be claimed as a tax-deductible expense from the ATO at the end of a financial year
a place where someone resides in. Examples include; single-detached dwellings (for instance a single home) or a dual dwelling (a dual occupacy home)
equity is the difference between the current value of a property and how much is owing against the property's mortgage
when someone takes out a mortgage loan for an investment property, this is a fee they pay their lender when they're borrowing more than 80% for the loan. It protects the lender in case the borrower defaults
Loan to Value Ratio (LVR):
a measurement used by financial institutions to determine if a borrower can afford the mortgage of an investment property. It's determined by calculating the total loan amount by the value of the property and multiplying it by 100
when a real estate investor receives less in incomings than they do in their outgoing expenses, even after tax deductions have been claimed. It's the opposite strategy to the cash flow positive strategy explained above
this is when a property investor purchases a property that hasn't yet been built
a term used to explain the total number of investment properties an investor may own
a person or company that is responsible for overseeing the day-to-day management of an investment property on the owners behalf. They act as the agent between the property owner and the tenant
used to determine the ROI based on the amount the property was originally purchased for. It can be calculated by multiplying the weekly rent from an investment property by 52 (weeks in a year) and dividing that number by the amount the property was purchased for. That number is then multiplied by 100 to determine the gross rental yield
a tax imposed by the Government based on transferring the title of the land for the property on to the buyer
when a block of land is divided into smaller, individual blocks of land
a measurement used to determine the quantity of rental properties that are available for rental occupancy in a certain location during a period of time
the legal definition of the person or entity selling a property
Other real estate investing questions?
If you have any questions relating to real estate investing or are looking to consult a professional about taking the next steps in investing, feel free to contact us on the details below. Alternatively, feel free to click the button shown below to book an appointment with an REIF Investment Specialist to support you in creating wealth for your financial future.
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