Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
Master economic fundamentals with our progressive approach
Foundation terms you need to know first (40 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 (42 terms)
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.
Demand elasticity measures the responsiveness of the quantity demanded of a good or service to a change in its price or other influencing factors, crucial for real estate market analysis and investment strategy.
A rent increase is when a landlord raises the amount of money a tenant pays for rent, typically at the end of a lease term. It's a common practice to keep up with rising costs and market values.
Rental supply refers to the total number of available residential or commercial properties for rent within a specific market at a given time, influencing rental rates and vacancy rates.
A rule of thumb in real estate investing is a simple, practical guideline used for quick, preliminary assessments of a property's potential, helping investors efficiently screen deals before conducting detailed analysis.
The scarcity mindset in real estate investing is a psychological bias where an investor perceives opportunities or resources as finite, leading to fear-driven decisions like rushing into deals or holding onto underperforming assets.
The secondary mortgage market is a financial marketplace where existing mortgage loans and mortgage-backed securities (MBS) are bought and sold by investors, providing liquidity to primary lenders and influencing interest rates.
A real estate market condition where low inventory and high buyer demand give sellers a significant advantage, leading to higher prices and faster sales.
Side hustle income refers to additional earnings generated outside of a primary job, strategically utilized by real estate investors to fund down payments, renovations, or build cash reserves, thereby accelerating their investment growth.
Speculative demand in real estate refers to the purchase of properties primarily driven by the expectation of future price appreciation, rather than for immediate use, rental income, or long-term intrinsic value.
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.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.