Real Estate Investing

13 Real Estate Terms You Must Know Before Investing

Are you a novice when it comes to real estate investing? Do you want to learn about the most frequent real estate marketing jargon? We’d be delighted to assist you with this. There are several common acronyms and jargons that you should be familiar with before making your first real estate investment or diversifying your investment portfolio. So the next time you hear a term like ROI, EMI, or FSI, you’ll know what it means and how important it is.

It’s not realistic to study all the terminology at once as a novice, but you can get acquainted with a few frequent ones below. We’ve developed a list of 13 common real estate terms that every marketer and investor should be familiar with.

BSP (Basic Sale Price) or Market Value (Market Value) (MV)

The seller’s basic selling price (BSP) or market value (MV) is the price per square foot at which the property is advertised for sale. Additional taxes such as the Goods and Services Tax (GST), amenity fees, preferential site fees, and other maintenance fees are not included. These extra charges can amount to up to 20% of the BSP.

Return on Investment (ROI)

Return on Investment (ROI) is a metric for determining how much money you make on a given investment. The return on investment (ROI) is computed by multiplying the net profit by the total capital cost of the investment. The higher the return on investment, the greater the profit. The return on investment (ROI) calculator can help you determine whether or not an investment is beneficial.

Return on Investment (ROI) = Net Income / Investment Cost

HOA

The HOA, or Homeowners Association, is a self-governing group of homeowners in a subdivision, apartment complex, or planned housing community. The HOA has the power to implement rules for keeping the properties in good repair and to collect monthly maintenance fees from the property owners. When you purchase a home in a specific HOA, you automatically become a member.

Cash Flow

After deducting all operating expenditures, cash flow refers to the net amount of cash you earn each month from a property. It’s the difference between the money that comes in and goes out of your asset. When your revenue exceeds your expenses, your investment is lucrative and your cash flow is positive. However, if your expenses exceed your income, you have a negative cash flow.

Appreciation

Real estate appreciation is defined as a rise in the value of a property over time. Property values can rise as a result of factors such as favorable location, high demand, limited supply, inflation, and so on. For example, home prices are likely to rise in areas where new and impending commercial and infrastructure improvements are underway.

Equal monthly instalments (EMI)

The monthly amount that a loan borrower must pay to the lender is referred to as the Equal Monthly Installment (EMI). Buyers who take out a house loan to buy a home must pay an EMI. The EMI is computed using a variety of parameters such as the loan amount, loan tenure, wage, age, credit history, and so on. The majority of banks and financial organizations provide house loans to those who qualify.

Turnkey properties

A turnkey property is a home or apartment that is nearly finished or close to being ready to move into. Turnkey properties are in high demand among investors since they may acquire them and start renting them out right away. Because these homes are brand new, the owners will not have to undertake any substantial renovations or repairs.

Build up Area

The carpet area, internal and external wall thickness, and balcony area are all included in the built-up space of a home or apartment. Inner walls and balcony spaces can account for up to 30% of an apartment’s total area in India. For example, if a house’s built-up size is 1000 square feet, the carpet area will not exceed 700 square feet. As a result, the built-up area is the real area that the home buyer will use.

Carpet Area


Carpet area is defined as the net usable floor area of an apartment excluding the area covered by external walls, areas under services shafts, exclusive balcony or verandah area, and exclusive open terrace area, but including the area covered by the apartment’s internal partition walls, according to the Real Estate Regulatory Authority (RERA). In other words, the carpet area is the area of the flat that may be covered by a carpet, omitting the thickness of the interior walls.

Super built-up Area

The saleable area is also known as the super built-up area since it is used by realtors to market their projects to potential buyers. The term “super built-up area” refers to the space of the apartment that includes carpeting, wall thickness, and other places such as the terrace, corridors, lobbies, staircases, and lifts. In some situations, the super building includes amenities such as a gym, swimming pool, clubhouse, and garden.

Floor Area Ratio

The maximum floor space allowed for building a structure on a particular piece of land is referred to as the Floor Area Ratio (FAR) or Floor Space Ratio (FSR). It is a ratio between the gross floor area of a building and the land area. The only difference is that it is expressed in percentage. It is also known as FSI (Floor Space Index). The FAR rules vary by location and are subject to change.

Free household property

Freehold property is one in which the owner has total and unfettered ownership of both the land and the structure. The owner has no constraints in this instance, and the property can also be inherited. Freehold homes are more stable than leasehold properties, and therefore will command a higher price in the future. The majority of freehold land is acquired through an auction or lottery.

Credit scores

A credit score is a calculation that determines a person’s creditworthiness or ability to repay a debt. A good CIBIL credit score is 750 or higher. The credit score, also known as the CIBIL score, is a three-digit number that ranges from 300 to 900. Before offering a home loan, banks and other lenders assess an individual’s credit score. It is calculated using the individual’s previous credit history.

Other advantages of having a higher credit score include reduced interest rates, more flexible repayment periods, and a faster approval procedure.

In India, real estate is one of the most rewarding investment options. Property is a long-term investment that appreciates in value. If you have a good understanding of the market and its current conditions, you may make the proper investment that will pay off well.

Leave a Comment

Your email address will not be published. Required fields are marked *

Contact Us
close slider