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.
Housing supply refers to the total number of homes available for sale or rent in a specific market at a given time, indicating the availability of properties for buyers and renters.
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.
Illiquidity refers to the difficulty of converting an asset into cash quickly without significantly impacting its market price. Real estate is inherently illiquid due to high transaction costs, lengthy sales processes, and market dependencies.
Inflation is the rate at which the general level of prices for goods and services is rising, leading to a decrease in the purchasing power of currency over time.
An inflation hedge is an investment, such as real estate, that is expected to retain or increase its value and purchasing power during periods of rising inflation, protecting wealth from currency devaluation.
Inflation hedging is an investment strategy designed to protect the purchasing power of capital from the eroding effects of rising inflation. It involves allocating assets that are expected to increase in value or generate higher income during inflationary periods.
The inflation rate measures the percentage increase in the general price level of goods and services over time, indicating the rate at which purchasing power declines.
Infrastructure refers to the fundamental facilities and systems, such as roads, utilities, and public services, that support a community and are crucial for real estate development and property value.
Infrastructure spending refers to government investment in public physical assets like transportation networks, utilities, and public facilities, which significantly influences real estate development, property values, and investment opportunities.
An Initial Public Offering (IPO) is the process by which a private company first offers its shares to the public, allowing individual and institutional investors to purchase ownership stakes. This transition from private to public ownership enables companies to raise significant capital for growth and expansion.
An institutional investor is a large organization, such as a pension fund, mutual fund, insurance company, or endowment, that pools money to invest in various assets, including real estate.
Interest is the cost of borrowing money, typically expressed as a percentage of the principal, or the return earned on invested capital. It is a critical factor in real estate financing, directly influencing loan payments, cash flow, and investment profitability.
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Key financial calculations, ratios, and valuation methods used to analyze real estate investments and performance.