7 Real Estate Terms You Must Know Before Investing!

Investing in your first real estate property in Panama can be an exciting time. But before doing that, you need to make sure that your money is going to the right place and that it will provide the optimum long-term returns. So, be sure to do your research especially before buying property in Panama and learn these seven terms that could help you make informed decisions throughout the process:

 

1. Return on investment

 

ROI pertains to the measure of profit an investment can give. It is calculated by dividing the net profit by the investment’s total capital cost. You need to aim for a higher ROI, which means you can earn better profit. Calculating the ROI can help you understand the profitability of an investment.

 

2. Turnkey property

 

This pertains to an apartment or home that is nearing completion or almost ready to be occupied or moved into. Investors buying property in Panama typically look into these types of properties because they can purchase it and start renting it out without waiting too long. And since these properties are new, owners don’t have to worry about repairs or renovation!

 

3. Basic sale price or market value

 

BSP or MV is the base rate per square foot where the property is listed for sale by a seller. It excludes additional charges, like the goods and services tax, preferential loan charges, amenity charges, and other maintenance.

 

4. Appreciation

 

In real estate, appreciation pertains to the increase in the property’s value over a period of time. Factors such as limited supply, high property demand, location, inflation, and others can influence the value appreciation of the property.

 

5. Equal monthly installment

 

EMI is a monthly amount that the borrower should pay the lender. It is applicable when buying property in Panama with a home loan, and it is calculated based on various factors, like credit history, salary, loan tenure and amount, and salary.

 

6. Freehold property

 

This pertains to property where the owner has unrestricted and completes ownership of the building and land. They have no restrictions to further transfer it, and the property can be inherited. That makes this type of property more stable than leaseholds, and capable of fetching higher value down the line.

 

7. Credit score

 

Lenders often look at your creditworthiness or eligibility before they approve your loan for buying property in Panama. This way, they can identify your capacity to repay over time. A high credit score could mean flexible payment terms, fast approval, and lower interest rates among other benefits.