6 Real Estate Terms You Should Know Before Investing
To be honest, every industry has some terminologies that are hard for people to crack. If they’re new to a particular industry, they would take their sweet little time to learn about those terms, figure out their meaning, and execute it accordingly in the industry. Real Estate is no different. Are you someone looking to invest in the Real Estate industry? Do you also struggle to know the exact meaning of some of the terminologies used in the industry? It doesn’t matter if you’re just starting out for investment or want to diversify your portfolio in Real Estate; these quick meanings about some of the most cliched and used terms can help you substantiate the culture of the industry.
Return on Investment (ROI)
Return on Investment is a total profit earned after putting in investment. You calculate ROI by dividing net income by the total cost of the investment, the result that you get is the profit you have earned from the investment. The more profit you have generated through the investment, the higher your ROI is.
Equal Monthly Installment (EMI)
Equal Monthly Installment is an amount a loan borrower needs to pay monthly to the lender. It applies to aspiring home buyers & is calculated based on various factors like loan amount, loan tenure, salary, age, credit, and more. The loan is easily availed through banks and financial institutions that serve people through finances and returns. You can also check your EMI through an online home loan EMI calculator by making input of your loan amount, period, rate of interest, and more.
Basic Sale Price (BSP) or Market Value (MV)
Basic Sale Price (BSP) is the cost per area square foot of property listed by the seller in any region. This cost doesn’t include additional charges like GST, amenity charges, location, and maintenance fees. Every region has a different BSP according to the infrastructure, development, and basic facilities of the region.
Cash flow is ideally referred to as the amount generated through investment in properties after deducting all the operating costs. It is the net difference between cash flowing out of your asset. If the cash flow of your investment is high, then the investment is a positive cash flow. But if you run through burning cash from the investment, it is considered as negative cash flow.
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The built-up area of a house is the actual area used to construct the home. It includes everything from the carpet area to the walls to the balcony spaces. Indian homes have up to 30% of the area occupied to build walls and balcony spaces. So, if a particular home has an area of 1000 square feet, the carpet area will not be more than 700 square feet.
The Real Estate Regulatory Authority (RERA) has mandated that the carpet area is the net usable floor of an apartment excluding the thickness of inner walls, verandah or balconies, terrace space, and areas under services shaft. But it includes the area of the internal partition walls of the apartment. In layman’s terms, the actuals area that can be covered by the carpet is termed as carpet area.
Real Estate being the most profitable business in India has got its shifts and progress. To understand the business of Real Estate you need to first understand the terms that are used in the niche so as it becomes efficient for you to understand the market. We hope that this article was helpful for you. We will be back with more.
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