Financial Terms

The 1% Rule?

The one percent rule is a guideline frequently referenced by real estate investors when evaluating potential property purchases. This rule of thumb states that the monthly rent should be equal to or greater than one percent of the total purchase price of an investment property. learn.roofstock.com Basic 101 math, buy a house […]

Refinance

Getting a new mortgage to replace the original is called refinancing. Refinancing is done to allow a borrower to obtain a better interest term and rate. The first loan is paid off, allowing the second loan to be created, instead of simply making a new mortgage and throwing out the original mortgage. –mortgagecalculator.org The main reason […]

Slumlord

Slumlord Law and Legal Definition. A slumlord is an unscrupulous landlord who milks a property without concern for tenants, neighborhoods or their own long term interests. Slumlords overcharge for property in poor neighborhoods that is kept in poor repair and allowed to deteriorate. –US legal.com Pretty straight forward here, this is a […]

1031 Exchange

“The term 1031 Exchange is defined under section 1031 of the IRS Code. (1) To put it simply, this strategy allows an investor to “defer” paying capital gains taxes on an investment property when it is sold, as long another “like-kind property” is purchased (within a certain time frame) […]

Capital Gains

A profit from the sale of property or an investment.‘a tax is imposed when individuals part with an asset and make capital gains on it’ -lexico.com When you sell your real estate investment you have a capital gain, provided there is in fact a “gain” […]

Adjustable Rate Mortgage

Also referred to as a ARM, the interest rate is not fixed but varies at specific times throughout the loan. Another characteristic of this loan is that it has a balloon payment due at a preset point. At that point the remaining principle is due […]

Wholesale

In real estate wholesaling, a wholesaler contracts a home with a seller, then finds an interested party to buy it. The wholesaler contracts the home with a buyer at a higher price than with the seller, and keeps the difference as profit. Real estate wholesalers generally find and […]

Land Contract

A land contract is a form of seller financing. It is similar to a mortgage, but rather than borrowing money from a lender or bank to buy real estate, the buyer makes payments to the real estate owner, or seller, until the purchase price is paid in […]