Property Basics
This legal document proves ownership of real estate.
What is a Title?
The ratio of loan amount to property value, used by lenders to assess risk.
What is Loan-to-Value (LTV)?
The IRS schedule used to report rental income, expenses, and depreciation.
What is Schedule E?
Buying, renovating, and quickly reselling a property for profit.
What is Flipping?
The person paying to occupy a rental unit.
Who is a Tenant?
The increase in property value over time due to demand, location, or improvements.
What is Appreciation?
This mortgage type begins with a lower rate but adjusts based on the market.
What is an Adjustable-Rate Mortgage (ARM)?
Residential rental property is depreciated over this many years.
What is 27.5 years?
Using borrowed funds to amplify potential returns.
What is Leverage?
Insurance typically required when a buyer puts less than 20% down.
What is Private Mortgage Insurance (PMI)?
The process of combining multiple parcels of land into one larger tract.
What is Assemblage?
A short-term loan used to “bridge” the gap before permanent financing.
What is a Bridge Loan?
Commercial real estate depreciates over this many years.
What is 39 years?
Net Operating Income divided by property value
What is the Capitalization Rate (Cap Rate)?
A legal claim against a property for unpaid debt.
What is a Lien?
This document shows a property’s boundaries, dimensions, and physical improvements.
What is a Survey?
The borrower’s written promise to repay a loan.
What is a Promissory Note?
The maximum tax-free gain for single filers selling a primary residence
What is $250,000?
An IRS-approved exchange of like-kind properties to defer capital gains.
What is a 1031 Exchange?
The account lenders use to collect property taxes and insurance.
What is an Escrow Account?
A right or feature that permanently “runs with the land.”
What is an Appurtenance?
A single mortgage that secures multiple properties.
What is a Blanket Mortgage?
The maximum tax-free gain for married couples filing jointly selling a primary residence.
What is $500,000?
The income generated by renting out property.
What is Rental Income?
Net Operating Income divided by annual debt service.
What is the Debt Service Coverage Ratio (DSCR)?