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