Main Features of the Software

Property Investment Glossary of Terms

Body Corporate:
The owners of the units/apartments within a building form a Body Corporate. These owners select a council who are responsible for the maintenance of the building (which includes all common areas).

Capital Gain:
The monetary gain that you obtain when an asset is sold for a higher price than you originally paid for it.

Capital Growth:
The increase in value of an asset or investment i.e. the difference between the current values and the original purchase price. (Provided the result is positive, not negative)

Capital Gains Tax:
Capital gains tax is payable on the sale of investment assets normally. Different rules applicable in different countries and states. Again, it is a good idea to seek professional advice to get accurate details that is applicable to you.

Certificate of Title:
A document, which shows the Ownership details, dimensions of the land, details of any mortgages and encumbrances.

Contract of Sale:
A written agreement which details the terms and conditions regarding the sale or purchase of a particular property.

Consumer Price Index:  (C.P.I)
Measures the national inflation rate. The index is measured quarterly (December, March, June and September quarters) and reflects changes in prices (up or down) of a fixed "basket" or list of goods and services.

Conveyancing:
The legal process involved in transferring the ownership of a property.

Fixed Rate Loan:
A loan priced at a fixed rate of interest for a set term. Interest rate and payments remain the same during the fixed term of the loan regardless of interest rate changes in the market.

Interest:
A charge on borrowed money or the return earned on funds invested.

Internal Rate of Return:  (IRR)
IRR is defined mathematically as the rate by which future anticipated net cash flow must be discounted so that their value will be equal to the initial cost of the investment. IRR can also be described as a value of future cash flows in relation to the purchase of a property. This is also referred to as True rate of return on the capital invested.

Land Tax:
Land tax is payable on the value of the land applying to an investment property. There are exceptions applicable based on certain criteria. Your accountant or the tax Dept will be able to give you more information on this.

Lease:
A document which grants a person/s tenancy of a property. A specific period and terms and conditions will apply. Contact the Managing Agent for details.

Loan Repayment Capacity:
Your monthly fixed debt commitments divided by your monthly gross income expressed as a percentage.

Loan to Valuation Ratio:
The amount of the loan financed as a proportion of the property value, expressed as a percentage.

Mortgage:
A legal document containing the terms and conditions applied to the funds (money) leant to a person (or legal entity) for the purchase of property (real estate).

Mortgagee:
The lender of the funds (money) to purchase the property.

Mortgagor:
The person who borrows the funds (money) to purchase the property.

Negative Gearing:
As already explained. If the tax deductible expenses from the property investment are greater than the rental income the excess tax deductions can be offset against income from other sources as salary or investment income.

Net Present Value:  (NPV)
NPV tell us how much the property is worth now to the investor. IRR tells us the rate of return if the property is bought at a certain price.

Outlay/Deposit:
A deposit is required when purchasing a property. Usually it is 5-10% of the sale price. This can vary depending on the vendor.

Principal:
The face value amount of a loan on which interest is calculated.

Settlement:
A date is set for settlement of the sale and at this point the balance of the contract price is paid and ownership of the property transfers from the vendor (seller) to the buyer.

Stamp Duty:
Stamp duty is taxable by the buyer on the value of the property at the time of purchase.

Strata Title:
This type of title gives you ownership of a unit, which you can lease or sell at your own discretion. Membership of the Body Corporate is automatic with this type of real property.

Valuation:
A report written by a registered valuer, detailing their opinion of the property value.

Variable Rate Loan:
A loan for which the interest rate changes as conditions in the money market change.

Vendor:
The party (seller) who offers a property for sale.

Yield:
The income gained from a property. The yield is usually expressed as a percentage of the value or cost of the investment.