Intermediate45 minutes8 terms

High-Leverage Portfolio Defense Glossary

This curated collection offers key terms that might be helpful when exploring risk management for high-leverage real estate investments. It's designed as a quick reference to understand commonly referenced concepts for protecting your assets.

Term Collection

Capital Expenditures

Capital Expenditures (CapEx) are significant funds spent by a real estate investor to acquire, upgrade, or extend the useful life of a property, rather than for routine maintenance or operating expenses. These investments enhance the property's value and are typically depreciated over time for tax purposes.

Intermediate14-15 min

Loan-to-Value Ratio

The Loan-to-Value (LTV) ratio is a financial metric used by lenders to assess the risk of a mortgage loan, calculated by dividing the loan amount by the property's appraised value, expressed as a percentage.

Intermediate14-15 min

Leverage

Leverage in real estate is the use of borrowed capital, typically through mortgages, to finance property purchases and amplify potential investment returns.

Intermediate15-18 min

Vacancy Rate

The vacancy rate is the percentage of all available rental units in a property or market that are currently unoccupied or not generating income, serving as a key indicator of a property's financial health and market demand.

Beginner13-14 min

Property Disposition

Property disposition is the strategic process of selling, transferring, or otherwise divesting an investment property. It involves evaluating market conditions, financial implications, and tax strategies to maximize returns and achieve specific investment goals.

Intermediate5 min

Interest Rate

An interest rate is the percentage charged by a lender for the use of borrowed money, typically expressed as an annual percentage of the principal amount.

Beginner15-18 min

Return on Equity

Return on Equity (ROE) is a financial metric that measures the profitability of a real estate investment in relation to the equity invested, indicating how efficiently an investor is using their capital to generate profits.