Price Anchoring Effect

  In real estate, the anchoring effect refers to subconsciously using irrelevant information or “anchor points” to make purchasing or investment decisions. In addition, the anchored meaning has to do with cognitive bias that occurs …

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Equity Multiple

Equity multiple essentially lets investors know how much money they stand to make on their upfront investment. What is equity multiple? Equity multiple is a commercial real estate term that refers to the total cash …

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LTV

What is LTV? As you build your real estate portfolio, you’ll encounter several acronyms that lenders and other investors use. Loan-to-value (LTV) is one of them. It’s a number that determines risk when someone takes …

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Closing Costs

What are closing costs? If you’ve purchased a home before, you know that the purchase price is just one of many costs associated with the home-buying process. Some of the most important costs are the …

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Capitalization Rate

What is the capitalization rate? Definition: The capitalization rate, also known as cap rate, is a term used to describe the expected rate of return on a real estate investment property. The most significant element to …

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Depreciation

What is depreciation? Depreciation is a decrease in an asset’s value caused by wear and tear, age, or changes in the market. There are two primary ways in which depreciation is commonly understood. The first …

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Contingency

What is a contingency? When it comes to real estate, a contingency is a clause in the purchase agreement that details actions and/or requirements to be met before the contract can become legally binding. The buyer …

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Yield

What is yield? If you want to invest in real estate, you need to know about yield. It’s the term for the annual income generated by one of your investment properties. Yield is a percentage …

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Closing Costs

What is it: Closing costs are the costs and fees charged to complete a real estate transaction. As the name might imply, the fees are due at closing, which is the finish line of a …

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