Real estate investing is one of the safest investments you can make, but it does require some Knowledge. To limit your risk and maximize your profit margin, you must learn before investing in your first property. It’s not practical to learn all the terms at once as a beginner, but you can get acquainted with a few common ones here. Suncity residential property compiled a list of 10 common real estate terms that every marketer and investor should be familiar with.
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- Build up Area: – Built-up area, as the name implies, refers to the property’s entire perimeter, including the thickness of the outer and inner walls, the carpet area, and the area covered by balcony and terrace as a result, the built-up area is the actual area that the home buyer will use.
- Floor Space Index (FSI): – The government-allowed ratio of total built-up area to actual plot area is referred to as the Floor Space Index. The built-up area grows in proportion to the FSI. Before signing the sales contract, the developer must provide the buyer with the FSI.
- Appreciation: – The term appreciation in real estate property refers to the increase in the value of a property over time. Inflation increased job opportunities in your market, and overall development in your town may all contribute to appreciation on a macro level.
- Equated monthly installment (EMI): – A fixed monthly payment made by a borrower to a lender on a set date each month is known as an equated monthly installment (EMI). Over the course of several years, the borrower makes fixed periodic payments to the lender with the goal of paying off the loan.
- Floor Space Ratio (FSR): – The Floor Space Ratio (FSR), also known as the Floor Space Index (FSI), illustrates the relationship between the total usable floor space of a building and the total area of the plot on which it is constructed. The FAR of an area is determined by local municipal corporations in order to regulate building heights based on the size of the land parcel.
- Home Owner Association (HOA): – A homeowner’s association (HOA) is a group that sets and enforces rules for the residential property of a subdivision, planned community, or condominium building. When you buy a home in an HOA’s jurisdiction, you automatically become a member and must pay dues, also known as HOA fees.
- Cash Flow: – After collecting all income, paying all operating expenses, and setting aside cash reserves for future repairs, Cash flow is the amount of profit you bring in each month. Cash flow is the primary lever used by buy-and-hold real estate investors to increase passive income.
- Loan Term: – The loan term refers to the length of time you intend to repay your loan through EMIs. You will be required to pay higher EMIs if you choose a short-term Home Loan. However, this will significantly lower interest rates, allowing you to save a greater portion of your hard-earned money.
- Freehold Property: – A freehold property is one in which the owner has complete and unconditional ownership. This term is most commonly used in the context of real estate property, where the owner has complete control over both the land and the structure that stands on it.
- Turnkey Property: – A turnkey property is a fully renovated home or apartment building that can be purchased and rented out right away by an investor. A turnkey home is typically one that has been purchased from a company that specializes in the restoration of older homes.
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