Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
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Foundation terms you need to know first (42 terms)
The marginal tax rate is the tax rate applied to your very last dollar of taxable income. It's crucial for real estate investors to understand how additional income or deductions will impact their tax bill.
Real assets are physical, tangible investments such as real estate, commodities, and infrastructure, valued for their intrinsic properties and often used as an inflation hedge and portfolio diversifier.
Building investor confidence is the process of developing a strong belief in one's ability to make sound real estate investment decisions, manage risks, and achieve financial goals through continuous learning and practical experience.
Housing supply and demand refers to the fundamental economic principle that explains how the availability of homes (supply) and the desire for homes (demand) interact to determine housing prices and market conditions.
The fundamental resources—land, labor, capital, and entrepreneurship—used to produce goods and services, including real estate, and are crucial for understanding economic activity and investment potential.
Complex strategies and professional concepts (43 terms)
Tax-exempt debt refers to bonds or other debt instruments issued by governmental entities or qualified private entities, where the interest earned by the bondholder is exempt from federal, and often state and local, income taxes.
A market phenomenon where a declining real estate market appears to reverse and begin an upward trend, only to quickly resume its downward trajectory, trapping investors who bought into the false recovery. It often leads to significant losses for those who misinterpret the temporary rebound as a true market bottom.
The Case-Shiller Home Price Index is a leading measure of U.S. residential real estate values, tracking changes in home prices across 20 major metropolitan areas and nationally using a repeat-sales methodology.
The Accounts Payable Turnover Ratio measures how quickly a company pays off its suppliers and short-term debts, indicating the efficiency of its working capital management and liquidity.
Other Comprehensive Income (OCI) represents revenues, expenses, gains, and losses that are excluded from net income but are recognized in comprehensive income, reflecting changes in equity from non-owner sources. It captures certain unrealized gains and losses that bypass the income statement.
Speculative investing in real estate involves making high-risk investments with the primary goal of profiting from short-term market fluctuations or anticipated future events, rather than long-term income generation or intrinsic value.
A financial statement that reports a company's total comprehensive income, which includes net income and other comprehensive income (OCI), providing a complete view of all changes in equity from non-owner sources.
The Sun Belt is a region of the United States generally spanning the southern and southwestern states, known for its warm climate, rapid population growth, and economic expansion, making it a popular target for real estate investors.
Supply elasticity in real estate measures the responsiveness of the quantity of new housing units or commercial spaces supplied to changes in market prices or rents. It is a critical metric for advanced investors to forecast market dynamics and potential investment returns.
Supply and demand are fundamental economic principles describing the interaction between the availability of real estate (supply) and the desire for it (demand), which collectively determine property prices and market conditions.
A market condition where the quantity of available real estate (supply) does not match the quantity buyers are willing and able to purchase (demand) at current prices, leading to shifts in property values and rents.
A swap rate is the fixed interest rate exchanged for a floating interest rate in an interest rate swap, reflecting the market's expectation of future interest rates and credit risk. It is a critical benchmark for pricing and hedging various financial instruments, including commercial real estate loans.
The Takings Clause of the Fifth Amendment to the U.S. Constitution prohibits the government from taking private property for public use without just compensation, safeguarding property owners' rights.
A tax bracket is a range of income that is taxed at a specific rate by the government. Understanding your tax bracket is crucial for calculating your tax liability and planning real estate investments.
Tax-exempt debt refers to bonds or other debt instruments issued by governmental entities or qualified private entities, where the interest earned by the bondholder is exempt from federal, and often state and local, income taxes.
The concept that a sum of money is worth more now than the same sum will be at a future date due to its potential earning capacity. It's a fundamental principle in finance and real estate investing.
Treasury yield is the return an investor receives on U.S. government debt securities, serving as a key benchmark for interest rates across the economy and significantly influencing real estate financing and valuations.
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