Real Estate Terms Made Easier

I remember how the mere thought of the approaching science exams used to send chills down my spine when I was in school. And even though I loved all my commerce subjects, I can completely understand how fearful numbers can be for some people. And any terms like mortgage, capital, private equity fund India, etc. –anything that is associated with numbers can fill people with dread. This insanely successful friend of mine was recently looking for a new place, but the real estate terms made her go crazy, even though her agent was handling every single thing. So here are some real estate terms explained in a simple manner for your convenience:



1.    Capital gain: When you sell a capital asset (eg. Land and building, plant and machinery, furniture etc.) at a price higher than the purchase price (i.e. more than what you bought it for), the profit resulting from that transaction is known as the capital gain.

2.    Appreciation and depreciation: When the market value of a property increases due to demand and supply or/and other factors, the property is said to appreciate. Similarly, when the market value of the property decreases, it is said to depreciate.

3.    Mortgage: If you use your Indian real estate property like land, house, or building to secure loan, it is known as mortgage. If the person fails to repay the loan plus interest as promised, the creditor can sell the mortgaged property to recover his money.

4.    Brokerage: The act of an intermediary (broker in this case) bringing in two parties together is known as brokerage. In fact, the fees or commission paid to the broker for his services is also known as brokerage.

5.    Penal rent: When a tenant fails to fulfil his obligations towards payment of timely rent, he, as a financial punishment, may have to pay an amount much more than the amount he originally had to pay for the default period.

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