Many investors prefer investing in real estate over investing in financial instruments such as bonds and securities. That’s because real estate has a great track record of high returns as compared to the investments in financial instruments that are a relatively new investment avenue. Real estate is one of the biggest industry in the world. Moreover, many governments offer tax rebates on real estate investments. Whether you are a first time investor or a seasoned player, investing in real estate can help you achieve your ROI goals. Like every other industry, real estate too has its peculiarities. People operating in the industry often use terminologies. Experienced investors understand these terms, however, first time investors may struggle to make heads or tails out of them. To help avoid confusion, in this post, we explain some common of the common terms used in the real estate industry. Take a look.
1. Capitalization rate
Whether you are thinking of investing in real estate in Istanbul or any other part of the world, you will come across this term. Capitalization rate can is the expected return in correlation to the initial investment. If, for instance, a property’s value is $500,000 and the capitalization rate is 10 percent, the return on the property will be $50,000.
2. Abstract of Title
Abstract of Title summarizes the property’s history including title changes and the legal actions performed about the property. An Abstract of Title includes information related to grants, wills, conveyance, liens, and encumbrances. Make sure you go through the abstract of title document, in detail, to determine the property’s status, before you finalize the deal.
3. Appraised value
The appraised value is the property’s value determined by a certified appraiser hired by the lender. Usually it’s the buyer who has to pay for the appraisal process. Based on the property’s appraised value, banks decide the borrower’s eligibility in terms of the money they can borrow and the borrowing term.
Do your homework before investing in real estate
Whether you are investing in real estate in Istanbul or any other part of the world, make sure have a decent understanding of real estate investments. Invest time in researching how the real estate industry functions and the factors you must consider when selecting a property. Instead of trying to do everything yourself, consider hiring an agency that you can trust upon to provide support at every step.
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