Life, health, disability, property insurance, risk assessment, and coverage strategies.
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Foundation terms you need to know first (15 terms)
Loss of income in real estate refers to a situation where an investor's expected rental revenue from a property is reduced or eliminated, often due to vacancies, tenant issues, or property damage.
Risk transfer is a strategy in real estate investing where the potential financial burden of a risk is shifted from the investor to another party, often through insurance policies or contractual agreements, to protect assets and limit liability.
Downside protection in real estate investing refers to strategies and measures taken to minimize potential financial losses or negative outcomes in an investment, safeguarding capital against adverse events.
Water damage refers to any destructive impact on a property caused by unwanted water, ranging from minor leaks to major flooding, leading to structural issues, mold, and significant repair costs for real estate investors.
Vacancy risk is the potential for a rental property to remain unoccupied for a period, leading to a loss of rental income and increased holding costs for the investor. It's a key factor in real estate investment analysis.
Complex strategies and professional concepts (4 terms)
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
Counterparty risk is the risk that a party to a contractual agreement will fail to fulfill its obligations, potentially leading to financial loss for the other party. In real estate, this can arise from various stakeholders, including lenders, borrowers, tenants, or joint venture partners.
The Infinite Banking Concept (IBC) is a financial strategy where individuals or businesses use a specially designed participating whole life insurance policy to become their own bank, financing major purchases and investments, including real estate, with policy loans.
Environmental insurance provides coverage for liabilities and costs associated with pollution incidents, contamination, and environmental damage, crucial for real estate investors managing properties with potential environmental risks.
Indexed Universal Life (IUL) is a type of permanent life insurance that offers a death benefit and a cash value component, where the cash value growth is linked to the performance of a market index, such as the S&P 500, typically with a floor and a cap on returns.
The Infinite Banking Concept (IBC) is a financial strategy where individuals or businesses use a specially designed participating whole life insurance policy to become their own bank, financing major purchases and investments, including real estate, with policy loans.
Investment risk in real estate refers to the potential for an investment's actual returns to differ from the expected returns, often resulting in financial loss. It encompasses various factors that can negatively impact property value, cash flow, or an investor's capital.
Lender risk assessment is the process financial institutions use to evaluate the potential for loss when extending credit for real estate investments, considering borrower, property, and market factors to determine loan approval and terms.
Liability insurance protects property owners from financial losses due to claims of injury or property damage caused to others on their property, covering legal costs and settlements.
Liability protection encompasses legal and financial strategies used by real estate investors to safeguard personal assets from claims, lawsuits, or debts originating from their investment properties. It creates a crucial barrier between business risks and personal wealth.
A contract where an insurer pays a death benefit to beneficiaries upon the insured's death, in exchange for premiums. For real estate investors, it's a vital tool for risk management, wealth transfer, and leveraging cash value for investment opportunities.
Liquidity risk is the potential for an investor to be unable to sell an asset quickly enough to prevent a loss or to meet short-term financial obligations without significant price concessions.
Loss of income in real estate refers to a situation where an investor's expected rental revenue from a property is reduced or eliminated, often due to vacancies, tenant issues, or property damage.
Loss of Income Protection is a type of insurance that reimburses real estate investors for lost rental income when their property becomes uninhabitable due to physical damage from a covered event, such as a fire or storm.
Market risk refers to the possibility of losses in real estate investments due to factors affecting the overall market, rather than specific property issues. These broad economic forces can impact property values, rental income, and investor returns.
Natural disaster risk assessment is the process of identifying, evaluating, and quantifying potential financial and physical impacts of natural hazards on real estate investments, crucial for informed decision-making and risk mitigation.
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