Not being able to understand or misunderstanding some of the real estate terms used in Houston, Texas, can significantly affect your overall returns. So before investing in my home, you should do your homework. Learn about all the acronyms, terms, concepts, and expressions that We Buy Fast Houston Houses has outlines below.
1031 Exchange
If you’re a home seller in Houston, Texas, you always have the option of deferring your capital gains taxes should you sell my house fast for a profit. The 1031 exchange is what makes that possible. It gives a real estate investor in Houston, Texas, the opportunity to buy a similar house with the sales profits, without first incurring taxes. By the way, the property has to be of “like-kind.”
Amortization
This is basically the process of paying back the loan you took, each month. Even though your total payment will not change, the amortization will help you calculate the principal and interest percentage that you are paying because the amounts vary month to month.
ARV
We Buy Fast Houston Houses has discuss the ARV before, and how it can impact my home in Texas. But for the sake of those who never read that post, we’re going to define it one more time. The ARV is an acronym that stands for the “After Repair Value” of a property. It’s not my home’s worth today, but what it will be worth once all the repairs and done.
BPO
The BPO is the broker price option. It’s relatively similar to the Comparative Market Analysis that is performed by a property appraiser, realtor, or broker. In this report, you’ll find information regarding my home in Houston, Texas, and its neighborhood. You can use this information to figure out the value and selling price or any house.
CAP Rate
Also known as the capitalization rate, it is useful when calculating the potential profit of my house in Houston, Texas. If you’ve done your due diligence you’ve realized that there are variations on this, but most of the time a property’s rate gets determined by dividing its net operating income by the market value.
Capital gains
Capital gains refer to the increase in my home’s value over time, in Houston, Texas. To calculate the capital gains, you just have to subtract the current value from the original buying price. These gains will not be taxed or assessed unless you decide to sell my house fast in Houston, Texas.
Earnest money
It’s a deposit made by a potential buyer to the seller as a sign of good faith. The money will give the buyer more time to secure financing or do their due diligence.
Equity
Did you buy my home using a loan? have you finished paying the loan? If you haven’t, then your equity will be the different between that loan balance and my home’s current value in Houston, Texas. So let’s say the property’s value is $450,000 and you owe the bank $250,000. You’d have $200,000 in equity.
Do you want to learn more real estate terms? Well, what are you waiting for? Get in touch with We Buy Fast Houston Houses, now!