positive leverage

Definition

When borrowed money produces a higher return than the interest cost, making you look like a financial genius. It's the Holy Grail of real estate investing: using other people's money to make more money than you're paying them.

Example Usage

With a 4% mortgage rate and an 8% cap rate, the investor enjoyed positive leverage that made her banker quietly jealous.

Origin

Financial term adapted to real estate investment analysis in the mid-20th century

Fun Fact

Positive leverage can flip to negative leverage faster than a property can flood, which is why 2008 was such a party.

Source: Real estate investment and finance terminology

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A contract binding a buyer to an agent for a specific period, ensuring the agent gets paid even if the buyer tries to ghost them after months of work. It's basically a pre-nup for the house-hunting relationship.

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mixed-use development

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contingencies

The 'what if' scenarios that keep project managers up at night and pad contracts with extra zeros. In real estate, these are the escape clauses buyers insert into offers like 'contingent on inspection' or 'contingent on not discovering the basement is haunted.' Essentially, it's the professional way of saying 'but only if everything goes according to plan,' which it never does.

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Assessed Value

The government's opinion of what your property is worth, used exclusively to calculate how much tax you owe. It's magically always high enough to maximize your tax bill but too low to impress your neighbors.

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principal

The original loan amount borrowed, excluding interest, or in agency relationships, the person represented by an agent. Context is everything, because confusing the two can make closing statements deeply confusing.

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