 |
Definition of 'Alligator Property'
In real estate, when the cost of mortgage payments, property taxes, insurance and maintenance on a rental property is greater than the income it brings in. If this situation is not corrected, it will eat up all of the owner's profit, leaving him or her with negative cash flow.
|
 |
Investopedia explains 'Alligator Property'
This occurs more often when a rental property is purchased near the peak of the real estate cycle. In this case, the investor buys the overvalued building and rents it out, but as interest rates rise and maintenance costs add up, the owner is forced to either sell the building or suffer a negative cash flow.
One way to get around the negative cash flow situation is to buy property with a large down payment, thereby reducing the mortgage payment.
|
-
Investing in rental property can generate serious income, but there's more to it than collecting rent.
Read More »
-
If you have property to sell and want to avoid capital gains tax, a Section 1031 exchange may be the answer.
Read More »
-
Search and compare the best fixed and adjustable mortgage rates in your area with Bankrate.com.
Read More »
-
|
|