Real Estate Basics
What is appreciation?
This term refers to an increase in the value of a property over time.
What is a down payment?
This term refers to the initial payment made by a borrower when purchasing a property.
What is rental income?
This term refers to the income generated from renting out a property.
What is house flipping?
This term refers to buying a property at a low price with the intention of selling it quickly for a profit.
What is a percentage lease?
This type of lease requires the tenant to pay a base rent plus a percentage of their sales.
What is land consolidation?
The process of combining multiple adjacent properties into a single larger plot is called this.
What is the debt-to-income ratio (DTI ratio)?
This ratio is used by lenders to determine a borrower's ability to repay a mortgage and is calculated by dividing total monthly debt payments by gross monthly income.
What is the capitalization rate (cap rate)?
The ratio of a property's annual net operating income to its purchase price is known as this.
Who are contractors or general contractors?
These professionals help investors determine the cost of repairs and renovations needed for a property.
What is the capitalization rate (cap rate)?
This metric measures the profitability of a commercial property and is calculated by dividing the property's net operating income by its purchase price.
What is a purchase agreement or contract?
This document outlines the legal description, purchase price, and terms of a real estate transaction.
What is a fixed-rate mortgage?
This type of mortgage has a fixed interest rate for the entire term of the loan.
What is a triple net lease (NNN lease)?
This type of lease requires the tenant to pay for additional expenses such as property taxes, insurance, and maintenance costs.
What is a property sold in "as-is" condition?
This term describes a property that is sold as-is, with no warranties or guarantees from the seller.
What is a commercial property analysis or a pro forma analysis?
This term refers to the process of analyzing the income potential and expenses of a commercial property.
What is an escalator or step-up lease?
This type of lease allows for rent to increase periodically based on a predetermined formula.
What is the Truth in Lending Act (TILA)?
This federal law requires lenders to disclose the true cost of borrowing, including the interest rate, loan terms, and closing costs.
What is the buy-and-hold strategy?
This strategy involves purchasing a distressed property, making renovations, and then renting it out for long-term cash flow.
What is a hard money loan?
This financing strategy allows investors to borrow funds based on the expected after-repair value of a property.
What is a commercial lease agreement or lease contract?
This document outlines the rights and obligations of landlords and tenants in a commercial lease agreement.
What is APR?
In real estate, this acronym stands for "annual percentage rate" and represents the true cost of borrowing money.
What is cash-out refinancing?
When refinancing a mortgage, this term refers to taking out a new loan that is larger than the existing loan balance and using the excess funds for other purposes.
What is rent escalation or rent adjustment?
This term describes the practice of adjusting rental rates periodically to keep up with market conditions.
What is comparable sales analysis or the sales comparison approach?
This term refers to the process of estimating a property's value by comparing it to similar recently sold properties.
What is a real estate investment trust (REIT)?
This type of commercial real estate investment involves pooling money from multiple investors to collectively purchase and manage properties.