What are sunk costs?

Generally speaking, sunk costs are costs that have already been incurred and cannot be recovered. For a real estate investment, this could potentially mean all amounts already spent on a property of any sort. However, in practice, it most usually means construction costs already spent on the property. Sometimes it can also mean such construction costs plus the purchase price (making it essentially the same as capital expenditures). The specific intended meaning depends on the context.

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