Investing
This term refers to using borrowed money to increase potential returns on an investment
what is leverage?
This state issued license allows you to represent clients in the purchase, sale, or lease of real property when sponsored by a broker
what is a real estate sales agent license
This cost category includes materials and labor used to physically build the project
what are hard costs?
This gives someone the legal right to occupy a property they do not own
What is a Lease?
This property type is when single family homes are built specifically for renters rather than buyers
what is build-to-rent (BTR)?
This risk profile describes the safest types of funds investors can buy into
What is a core fund?
This is the fee paid to a broker for successfully closing a transaction
what is a commission?
This cost category includes legal fees, permits, and architectural design
what are soft costs?
This is the government's right to take private property for public use with just compensation
What is Eminent Domain?
This type of lease requires tenants to pay taxes, insurance, and maintenance
what is a triple net lease (NNN)?
This is a vehicle that allows investors to buy a share of a real estate portfolio and can trade on the public market
What is a real estate investment trust (REIT)?
This document outlines the terms under which a broker represents a client in the sale of property
what is a listing agreement?
This metric compares a project’s stabilized NOI to total development cost
what is yield on cost (YOC)?
This legal claim against a property is often used by lenders to secure a loan
what is a lien?
This metric measures the percentage of available units that are occupied
This return metric allows an investor to see the time-weighted return on a project by setting the net present value equal to 0
This document summarizes a property’s financials and highlights key selling points for buyers
what is an offering memorandum (OM)?
This metric measures total rentable area divided by total land area
what is floor area ratio (FAR)?
Unlike condominiums, residents in this ownership structure do not hold title to their unit but instead receive a proprietary lease tied to shares in a corporation
what is cooperative housing (co-op)?
This rate is calculated by dividing NOI by purchase price and is used to value real estate
what is a cap rate?
This structure allows the manager (GP) of a project to earn outsized returns compared to investors (LP) if targets are met
What is a waterfall structure?
This analysis compares recent comparable transactions to estimate a property’s value
This difference between yield on cost and market cap rate that determines whether a project creates value
what is a development spread?
This legal provision requires a sponsor to return excess profits to investors if performance hurdles are not ultimately met across the life of a fund
what is a clawback provision?
This type of clause escalates rent annually based on changes in inflation