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Updated over 4 years ago on . Most recent reply

User Stats

17
Posts
3
Votes
Alfredo Villegas
  • Las Vegas, NV
3
Votes |
17
Posts

Equity explained please.

Alfredo Villegas
  • Las Vegas, NV
Posted

Sorry I’m sorry but I still don’t get what equity is. I’ve been interning for a big investor in Las Vegas and I’m motivated by what real estate can do for me and my future. Just a question that I’m to embarrassed to ask. I need a simplified version “for dummies” unfortunately. I’m grateful for any and all questions!

Most Popular Reply

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5,156
Posts
5,199
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Scott Mac
  • Austin, TX
5,199
Votes |
5,156
Posts
Scott Mac
  • Austin, TX
Replied

Hi Alfredo,

Equity:

Alfredo just bought a house for $100,000 with a bank loan of $80,000 and a cash down payment of $20,000.

Alfredo has $20,000 in equity in the house.

1 year later the value of the house (if Alfredo wanted to sell it --based on comps-- is $120,000).

Alfredo now has $40,000 in equity. $20,000 cash + $20,000 rise in value.

2 years later the Real Estate market drops and the house value (based on comps is $80,000).

Alfredo now has Zero Equity in the house (but he can still rent it out).

Hope that helps.

Good Luck!

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