12 Real Estate Terms You Must Know Before Investing

The real estate market can be daunting and overwhelming to many first-time investors, especially in regard to the terms used. Here are twelve real estate terms that you must be familiar with before investing:

Return on Investment – This is the profit you stand to make on an investment and is calculated by dividing the net profit by the total investment. Cash Flow – This is the net amount of cash earned monthly off a property after deducting operating costs.

Market Value or Basic Sale Price – This is the base rate value per square foot that the property is listed for sale.

Appreciation – This is the increase in the value of a property over time. This is influenced by factors such as location, builder, demand for property, etc.

Homeowners Association – This is an organization of homeowners in an apartment enclave or subdivision that is responsible for enforcing the rules.

Turnkey Property – A turnkey property is one that is nearing completion and is almost ready to move into.

Equal Monthly Instalment – This is the monthly amount that the borrower of a home loan has to pay the lender.

Built-up Area – This is the entire area of a home and includes the carpet area, wall thickness, and balcony area.

Super Built-up Area – This is the area of a home, including carpet area, wall thickness, and common areas like lifts, corridors, and lobbies.

Carpet Area – This is the net usable floor area, excluding that covered by external walls, balconies, etc.

Floor Space Ratio/Floor Area Ratio – The ratio between the gross floor area and land area. This is the maximum floor space permitted for building construction.

Credit Score – Also known as CIBIL score, this is a measure of the ability of an individual to repay a loan. This three-digit number is calculated by banks and financial organizations to evaluate an applicant before disbursing a loan.

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