carrying costs

Definition

Ongoing expenses of property ownership including mortgage, taxes, insurance, utilities, and maintenance while holding property for investment. These costs literally 'carry' you financially from purchase to sale, often eating profits investors forgot to calculate.

Example Usage

The house flipper's profit margin evaporated when carrying costs over eight months consumed most of the expected $40,000 gain.

Origin

Investment and accounting terminology, applied to real estate in mid-20th century development analysis

Fun Fact

Carrying costs are why many developers prefer 'build-to-suit' projects with pre-signed tenants rather than speculative development.

Source: Real estate investment analysis standards

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proforma

A financial forecast showing what a property could theoretically earn under perfect conditions with perfect tenants in a perfect world. The real estate equivalent of a dating profile.

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principal residence

The home where you live most of the year, receiving favorable tax treatment including capital gains exclusions and mortgage interest deductions. The IRS cares deeply about distinguishing this from your 'vacation home' to prevent creative accounting.

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contingent financing clause

A contract provision allowing buyers to back out if they can't secure a loan, essentially making the deal conditional on a bank's approval. It's the escape hatch that makes sellers nervous and buyers sleep better at night.

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land trust

A legal entity holding title to real property with beneficiaries maintaining actual control and benefits of ownership, often used for privacy and estate planning. It's property ownership's invisibility cloak, keeping your name off public records.

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exclusive right to sell

A listing agreement guaranteeing the agent gets paid commission regardless of who finds the buyer—even if it's you. It's the real estate equivalent of a no-compete clause, except you're competing against yourself.

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joint tenancy

A form of property ownership where two or more parties hold equal, undivided interest with right of survivorship, meaning the property automatically transfers to surviving owners upon one's death. It's estate planning that bypasses probate court, assuming everyone stays friendly.

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