Investment Glossary Terms

A reduction or elimination of property-related charges, such as taxes or fees. It is often granted to promote development, reduce financial burdens, or address economic hardship. Investors use them to increase profit margins and lower expenses.

A measure of how quickly properties are sold or rented in a specific market during a given period. It reflects supply and demand dynamics; high rates indicate strong demand, while low rates may suggest oversupply.

A hands-on strategy where investors are deeply involved in property selection, acquisition, management, and development. It requires significant time and expertise but offers greater control and potential for higher returns.

A tax based on the assessed value of a property, used by local governments to fund public services like schools and roads.

A legal concept allowing an individual to claim ownership of a property by occupying it continuously and openly without permission for a statutory period.

An investment strategy where properties are rented to travelers for short periods. This can generate higher income than long-term rentals but involves higher management costs.

The process of paying off a loan in regular installments that include both principal and interest.

A professional assessment of a property's market value conducted by a licensed appraiser, crucial for securing financing.

The increase in a property's value over time due to market demand, location improvements, or enhancements.

An official valuation of a property's worth, typically for tax purposes.

A diversification strategy where funds are distributed across different property types and locations to balance risk.

A public sale process where properties are sold to the highest bidder, often at discounted prices.

A mortgage involving small regular payments followed by a large lump-sum payment at the end of the term.

A legal process for those unable to repay debts, which can create opportunities to acquire distressed properties at reduced prices.

An acronym for Buy, Rehab, Rent, Refinance, Repeat—a strategy for building a portfolio by pulling out equity from renovated properties.

Safety and health regulations governing construction standards; compliance is essential to avoid legal issues.

A long-term strategy of acquiring properties for rental income and long-term appreciation.

A condition where property supply exceeds demand, giving buyers more negotiating power.

A metric used to evaluate the return on an income-producing property, calculated by dividing Net Operating Income (NOI) by the purchase price.

The net income generated by a property after all expenses and mortgage payments are deducted.

Fees incurred during the finalization of a real estate transaction, such as title insurance and legal fees.

Real estate intended for business use, such as offices or warehouses.

A method of determining value by comparing a property to similar ones recently sold nearby.

A contract clause allowing a party to back out if certain conditions, like an inspection, are not met.

A method where multiple investors pool funds to finance large real estate projects.

The number of days a property is listed before being sold; high DOM may indicate overpricing.

A lender metric comparing monthly debt payments to gross monthly income to assess repayment ability.

The gradual decrease in property value due to wear and tear, which offers tax benefits for investors.

A property in poor physical or financial condition, often sold below market value.

The thorough investigation (inspections, audits, research) conducted before purchasing a property.

A deposit made by a buyer to show serious intent to purchase.

A legal right to use another person's land for a specific purpose, such as utility lines.

The government's power to take private property for public use with fair compensation.

An unauthorized intrusion onto another's property, such as a fence crossing property lines.

The portion of a property the owner truly owns (Market Value minus outstanding mortgage).

A neutral third party holding funds or documents until transaction conditions are met.

The legal process of removing a tenant for lease violations.

The price a property would sell for in an open, competitive market without pressure.

A mortgage insured by the Federal Housing Administration, requiring lower down payments.

A loan where the interest rate remains constant for the entire term.

Buying, renovating, and selling a property quickly for profit.

The legal process where a lender repossesses a property due to payment failure.

A residential building with four separate units.

Evaluating economic and market conditions to find a property's intrinsic value.

A low-rise apartment complex with landscaped grounds.

Publicly owned properties (e.g., courthouses) that can provide stable long-term lease income.

A simple valuation metric: Property Price divided by Annual Gross Rental Income.

A detailed examination of a property's structure and systems before purchase.

An organization that manages shared spaces and enforces community rules.

A measure of whether a typical family can qualify for a mortgage on a median-priced home.

A loan with an initial fixed-rate period followed by an adjustable rate.

A system for displaying property listings from multiple sources on real estate websites.

Land developed with structures or utilities to increase value.

The percentage charged for borrowing money, impacting mortgage affordability.

A metric used to evaluate profitability, considering the time value of money.

Real estate purchased to generate rental income or capital appreciation.

An indicator of local job creation, which drives real estate demand.

Equal co-ownership where a share automatically transfers to survivors upon an owner's death.

A contract specifying rent and responsibilities between landlord and tenant.

A legal claim against a property as security for a debt.

A lender's risk assessment metric comparing the loan amount to the property's appraised value.

A property leased for extended periods (usually 1+ years) for stable income.

The expected price in an open and competitive market.

A project combining residential, commercial, and/or industrial uses.

A loan secured by real estate as collateral.

Properties with multiple units generating income from several tenants.

Income after operating expenses but before taxes and financing.

A formal notice to terminate a lease and specify a move-out date.

The percentage of units currently rented or occupied.

A method where the seller provides the loan to the buyer directly.

Earnings from investments requiring minimal active involvement.

The administration of rental operations, maintenance, and tenant relations.

Local government taxes based on assessed property value.

A company that owns and operates income-producing real estate, allowing individuals to buy shares.

Replacing an existing loan with a new one to get better terms or access equity.

Rental income expressed as a percentage of the property's value.

A government claim on a property due to unpaid taxes.

Protection against financial loss from title defects or ownership disputes.

City divisions reserved for specific purposes (residential, commercial, etc.).

Regulations governing land use to ensure orderly urban planning and protect property values.