Finance Basics
What is the term for the money borrowed to purchase real estate?
Mortgage
What is the first phase of the real estate development process?
Site Acquisition
What is the most common type of long-term loan for purchasing real estate?
Fixed-rate mortgage
What is the formula for Gross Rent Multiplier (GRM)?
Property Price / Gross Rental Income.
What is the term for the cyclical pattern of growth, peak, decline, and recovery in real estate markets?
Real Estate Market Cycle.
What is the term for a percentage fee charged by lenders on the principal loan amount?
Interest rate
What phase involves obtaining building permits and zoning approvals?
Entitlement.
What financing tool involves pooling multiple investors to fund a real estate project?
Real Estate Syndication.
What does NOI stand for in real estate finance?
Net Operating Income.
What economic indicator measures the cost of construction materials and labor?
Construction Cost Index.
What is the name of the document that secures a loan with real property as collateral?
Deed of Trust or Mortgage Agreement
What phase involves marketing the property to prospective tenants or buyers?
Lease-up or Sales
What is the name for a loan based on future rental income of a property?
Bridge Loan.
What is the metric used to measure the return on investment for a property?
Cap Rate (Capitalization Rate).
What trend involves converting older buildings into modern residential or commercial spaces?
Adaptive Reuse.
What is the term for the process of determining the value of a property?
Appraisal
What is the final stage in the real estate development process?
Property Management or Stabilization.
What is the financing arrangement where the lender receives equity in exchange for funding?
Equity Financing.
What is the breakeven occupancy rate?
The occupancy rate at which rental income covers operating expenses and debt service.
What is the term for an area with high demand due to amenities, safety, and proximity to jobs?
Hot Market
What is the legal term for defaulting on a mortgage, leading to the lender reclaiming the property?
Foreclosure
What phase typically includes conducting feasibility studies and market analysis?
Pre-Development
What is the government-backed loan program often used for affordable housing projects?
FHA Loan or Low-Income Housing Tax Credit (LIHTC).
What is the term for the total profit of a project expressed as a percentage of the initial investment?
Internal Rate of Return (IRR).
What real estate investment strategy focuses on underserved markets or properties with high upside potential?
Value-Add Investment.