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The real estate industry is a broad sector that requires specialized knowledge for one to navigate through it properly. Usually, every sector has its acronyms and jargon that one needs to understand. There are terms that beginners need to understand before investing in the real estate industry. This article explains relevant terms used in the real estate sector that beginners need to understand. Let’s dive in!

Equity

Equity is referred to as the variation between the initial market value of a particular property and the amount that the property owner owes the mortgage. The equity value is said to increase slowly as the balance of the mortgage reduces. On the other hand, the value of the property appreciates.

Appreciation

This is said to be an increase in the value of a real estate property within a particular period. However, the increase in the value of a property depends on a wide variety of things, such as a weakening supply and inflation.

Realtor

A realtor is an individual who works as an agent during a real estate transaction. Note that this individual should be a member of the National Association of Realtors. The individual works in accordance with the rules and regulations of realtors.

Cash Flow

This is regarded as the amount of money that a real estate investor can pocket at the end of every month. However, this amount is calculated after the investor has paid all the expenses, including loans. Note that cash flow can be either positive or negative, depending on your expenditure. Also, if the cash outflow is more than the cash inflow, then you will record a negative cash flow.

Rental Property

Rental property refers to the type of property owned by an investor, from which they receive payments on a monthly basis from the tenants. Note that the rental property might be either commercial or residential.

Real Estate Agent

This is a licensed real estate professional that represents either sellers or buyers during a significant transaction. It is good to understand that most professionals in the real estate sector begin as agents working under certified real estate brokers.

Bottom Line

Understanding the basic terms used while investing in the real estate sector makes it easier for beginners to navigate through. The terms mentioned above make it easy for beginners to survive in the industry.