Macroeconomic concepts, interest rates, inflation, Federal Reserve policy, and economic cycles.
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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.
Convexity measures the sensitivity of a bond's duration to changes in interest rates, quantifying the non-linear relationship between bond prices and yields, which is crucial for advanced fixed-income portfolio management.
Correlation measures the statistical relationship between two or more variables, indicating how they move in relation to each other. In real estate, it helps investors understand market dynamics and manage portfolio risk.
The Cost of Living refers to the amount of money needed to cover basic expenses like housing, food, taxes, and healthcare in a certain place and time, impacting real estate investment decisions.
Countertrade in real estate refers to a reciprocal form of international trade where goods or services are exchanged for property, or property for other assets, rather than for cash. It's often used to overcome currency restrictions or facilitate complex cross-border transactions.
A temporary, short-lived recovery in asset prices during a prolonged bear market, often characterized by a lack of fundamental support and followed by a continuation of the downtrend.
Delayed gratification in real estate investing is the strategic choice to forgo immediate profits for substantially larger returns achieved over an extended period, relying on patience, compounding, and long-term market growth.
A demand draft is a payment instrument issued by a bank on behalf of a customer, instructing another bank or its own branch to pay a specified sum of money to a named beneficiary. It is a secure and reliable method for transferring funds, often used in real estate transactions.
Demand drivers are the underlying economic, demographic, and local factors that influence the need and desire for real estate, directly impacting property values, rental rates, and investment opportunities.
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 derivative is a financial contract whose value is derived from an underlying asset, index, or interest rate, used by real estate investors for hedging risk, speculation, or leveraging market movements without direct asset ownership.
Derived demand in real estate refers to the demand for a property or space that arises not from the direct desire for the property itself, but from the demand for the goods or services produced within or facilitated by that property.
The amount of money an individual or household has left to spend or save after paying income taxes. It's a key indicator of financial health and purchasing power.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.