Looking to start investing in real estate?
Here are 6 common real estate investing terms + definitions you NEED to know!
ROI: Return on investment, otherwise known as ROI, is a ratio between net income and investment to measure the profitability of an investment.
Short-Term Rental: Short for short-term rentals, a STR is typically a furnished home, condo, or apartment rented to guests for a shorter period of time (under 30 days). Short-term rentals have become highly popular in recent years.
Long-Term Rental: Short for long-term rentals, a LTR is typically a single-family home, condo, or apartment rented out to a tenant for a long period of time. A long-term rental is considered to be more of a traditional approach to investing.
Cash Flow: Cash flow is the net amount of money you bring in after paying all operating expenses, setting aside money for taxes, and putting away cash reserves for maintenance and future repairs.
Equity: Home equity is one of the biggest perks of homeownership. Your equity will build with each house payment you make (building up the value of your asset), Real estate property becomes a valuable asset you can use down the road as you build equity.
Homeowners Association (HOA): Short for Homeowners Association, an HOA is an organization in the community that makes + reinforces rules to help maintain a clean and well-kept neighborhood. This is an important term to know, as HOA fees are typically required monthly and some HOAs do not allow rental properties
Photo by: One Look Real Estate