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Read to Learn Describe the three types of residential property. Discuss aspects of home buying that a potential home owner should know. Determine the difference between rental property and underdeveloped property.

The Main Idea Real estate is an investment option. Residential property, such as single-family homes, is usually considered a good investment. Property can also generate income.

Key Concepts Investing in Real Estate Buying a Home Income Property

Key Terms real estate land and anything attached to it, such as buildings or natural resources residential property property in which an individual or family lives

Key Terms real estate agent a person licensed to arrange the buying and selling of homes and other types of real estate the value of a piece of property less the amount still owed on the money borrowed to purchase it equity

Key Terms income property property used to generate income rental property any type of dwelling unit or other property rented for a length of time

Key Terms underdeveloped property unused land intended only for investment purposes

Investing in Real Estate Unlike stocks and bonds, real estate is something you can use. real estate land and anything attached to it, such as buildings or natural resources

Tax Advantages Home owners can deduct the mortgage interest they pay each year on their federal income tax. This allows home owners to lower their reported income, which decreases the amount of tax they owe. Property taxes are also deductible.

Investing in Real Estate A home is considered a good investment because home prices have risen steadily over the years. Homes fluctuate in value, just like other investments.

Types of Homes The type of residential property that people pick depends on their income and needs. residential property property in which an individual or family lives

Graphic Organizer The most popular type of property Single-Family Homes The most popular type of property Usually on its own lot Separate from other buildings Range from two-bedroom homes to mansions Multi-Unit Housing Manufactured Homes

Graphic Organizer Single buildings divided into various units Single-Family Homes Single buildings divided into various units Includes duplexes, townhouses, condominiums, and cooperatives Multi-Unit Housing Manufactured Homes

Graphic Organizer Single-Family Homes Prefabricated houses are partly assembled at a factory, and put together at a building site Mobile homes are fully assembled at factories Cost is lower than other types of homes Multi-Unit Housing Manufactured Homes

Buying a Home Most people have to finance the purchase of a home with a home mortgage loan. Buying a house requires a down payment, which is usually 20 percent.

Figure 32.1 Housing Costs

Home buyers often obtain a real estate agent to help them find a home. Buying a Home Home buyers often obtain a real estate agent to help them find a home. real estate agent a person licensed to arrange the buying and selling of homes and other types of real estate

Home Values Factors affecting home values include: Size Condition Quality Location

The amount of equity you have in a home is very important. Home Values The amount of equity you have in a home is very important. equity the value of a piece of property less the amount still owed on the money borrowed to purchase it

With income property, the owner can product income in two ways: property used to generate income Collecting rent Selling the property for a profit

Income Property Apartment buildings and commercial properties are two common types of rental property. rental property any type of dwelling unit or other property rented for a length of time

Income Property Underdeveloped property usually does not have utility services and cannot be farmed. underdeveloped property unused land intended only for investment purposes

Describe different types of residential property. single-family homes, on their own lots; multi-unit housing, single buildings divided into units; manufactured homes, prefabricated or mobile homes

What are some factors to consider before buying a home. home mortgage loan and down payment, a real estate agent, size, condition, quality, and location

Discuss the two forms of income property. collecting rent from rental property or selling property for a profit

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