Capital is a term used to describe the money or assets that are used to invest in a property. It can also refer to the value of a property itself.
There are two main types of capital:
- Equity capital is the money that an investor has invested in a property. This includes the purchase price of the property, as well as any additional money that has been invested in the property, such as renovations or improvements.
- Debt capital is the money that an investor has borrowed to finance the purchase of a property. This includes the mortgage loan, as well as any other loans that have been taken out to finance the property.
The amount of capital that an investor has available will affect the type of property that they can afford to invest in. For example, an investor with a large amount of equity capital may be able to afford to purchase a property outright, while an investor with a smaller amount of equity capital may need to take out a mortgage loan.