Chapter 22 Investing in RE Flashcards Preview

MA RE Licenscure Exam > Chapter 22 Investing in RE > Flashcards

Flashcards in Chapter 22 Investing in RE Deck (20)
1

direct ownership

most prevalent form of RE investment, both individuals and corps may own RE directly and manage it as in investment income or cashflow.

2

Appreciation

increases in value.
inflation and intrinsic value affect appreciation.

3

inflation

the increase in the amount of money in circulation

4

intrinsic value

is the result of a person's individual choices and preferences for a given geographic area

5

cash flow

the total amount of money remaining after all expenditures have been paid.

6

due diligence

exploration of the benefits and drawbacks of the investment

7

Leverage

is the use of borrowed money to finance an investment

8

equity buildup

results from the addition to the amount paid as down payment on property of the principal portion of loan payments plus any increase in property value due to appreciations.

9

pyramiding

the process of using one property to drive the acquisition of additional properties.

10

depreciation

allows an investor to recover the cost of an income producing asset through tax deductions of the asset's useful life.

11

Cost Recovery Money

may only be taken on personal property and improvements to land

12

Straight-line depreciation

taken periodically in equal amounts over an asset's useful life.

13

Accelerated cost recovery system

to claim greater deductions in the early years of ownership, gradually reducing the amount deducted in each year of useful life

14

Capital Gain

the difference between the adjusted basis of property and it's selling price

15

Basis

determines the amount of gain to be taxed. the basis of the property is the investor's initial cost of RE.

16

Exchanges

used to defer cap gains tax by buying new property of like kind.

17

boot

additional capital or property which will be taxed in an RE tansaction

18

syndicate

is a business venture in which people pool their resources to own or deelop a particular piece of property.

19

REIT RE investment trust

investors take advantage of the same tax benefits as do mutual fund investors

20

REMIC

has qualification, transfer, and liquidation rules; it is notable because of the asset test requirement