Property Management / Real Estate Terms

We often get asked to explain in simple terms, what certain real estate / property management terms mean?! Well here they are!!

Abandonment:Tenant vacating a property before lease expiration.

Abatement: Reduction or suspension of rent due to issues in the property.

Accelerated Depreciation: Quicker property value decrease for tax benefits.

Amortization: Gradual repayment of a loan through scheduled installments.

Appraisal: Assessment of property value by a qualified expert.

Asset Management: Supervision to maximize property value and returns.

Assessment: Valuation for property tax purposes by a local authority.

Balloon Mortgage: Short-term loan with a large final payment.

Benchmarking: Comparing property performance against industry standards.

Broker Price Opinion (BPO): Property value estimate by a real estate broker.

Building Code: Regulations defining construction and safety standards.

Buyer’s Market: Market condition favoring buyers due to low demand.

Capital Expenditure (CapEx): Significant property investment for long-term improvement.

Cash Flow: Income generated from a property after expenses.

Caveat Emptor: Latin term meaning “buyer beware” in property transactions.

Condo Association: Management body overseeing condominiums.

Conveyance: Transfer of property ownership or title.

Covenant: Agreement or promise tied to property usage or restrictions.

Debt Service Coverage Ratio (DSCR): Property’s ability to cover debt payments.

Default: Failure to fulfill contractual obligations in a property transaction.

Deferred Maintenance: Delayed property repairs leading to deterioration.

Due Diligence: Comprehensive property investigation before purchase or management.

Earnest Money: Deposit to confirm a buyer’s serious intent in a real estate transaction.

Easement: Legal right to use another’s property for specific purposes.

Eminent Domain: Government’s right to acquire private property for public use.

Eviction: Legal process to remove tenants for non-compliance.

Fannie Mae: Federal National Mortgage Association supporting the housing market.

Fair Housing Act: Legislation preventing housing discrimination.

Fiduciary Duty: Legal obligation to act in the best interest of another party.

Fixed-Rate Mortgage: Loan with a constant interest rate.

Foreclosure: Legal process of reclaiming property due to loan default.

Gentrification: Transformation of a neighborhood with increased property values.

Good Faith Estimate (GFE): Loan estimate provided by lenders to borrowers.

Grace Period: Time allowance for late rent payment without penalties.

Gross Rent Multiplier (GRM): Ratio estimating property value from rental income.

Hazard Insurance: Protection against specific property damages.

Homeowners Association (HOA): Group managing communal spaces.

Holding Cost: Expenses incurred while owning a property.

Holding Period: Duration a property is owned before being sold or disposed of.

Income Approach: Valuation based on property income potential.

Ingress and Egress: Right to enter and exit a property.

Inflationary Risk: Risk of property value decrease due to inflation.

Joint and Several Liability: Each party’s responsibility for the entire lease in shared tenancy.

Joint Tenancy: Co-ownership with survivorship rights.

Joint Venture: Collaboration for property investment.

Kicker: Additional payment or bonus received in property deals.

Landlord Insurance: Policy covering property owners from losses or liabilities.

Lease Agreement: Contract defining terms between landlord and tenant.

Lien: Legal claim against property for unpaid obligations.

Maintenance: Repairs and upkeep to preserve property condition.

Market Value: Property’s estimated worth in the current market.

Master Lease: Primary lease allowing sub-leasing within certain terms.

Mortgage Broker: Facilitator connecting borrowers with lenders.

Net Operating Income (NOI): Income after deducting operating expenses.

Non-Disclosure Agreement (NDA): Confidentiality contract in transactions.

Non-Performing Asset: Property failing to generate income or value.

Occupancy Rate: Percentage of occupied units in a property.

Option Agreement: Contract granting the right to purchase a property at a predetermined price.

Owner’s Association: Management for single-family home communities.

PITI: Mortgage payments including principal, interest, taxes, and insurance.

Plottage: Increase in property value due to combining adjacent parcels.

Property Manager: Overseer handling property operations for owners.

Property Tax: Tax based on the assessed value of a property.

Quiet Title: Legal action to determine property ownership rights.

Qualifying Ratio: Lender criteria to assess mortgage eligibility.

Real Estate Investment Trust (REIT): Company investing in real estate.

Rent Control: Government regulations on rent increases.

Rentable Square Footage: Area available for rent within a property.

Reserve Fund: Savings for future property expenses.

Security Deposit: Tenant payment for damages or unpaid rent.

Seller’s Disclosure: Mandatory information about a property’s condition provided by the seller.

Sweat Equity: Labor contribution to increase property value.

Tax Lien: Government claim on a property for unpaid taxes.

Title Insurance: Protection against property ownership disputes or defects.

Underwater Mortgage: Loan amount exceeding the property’s current value.

Underwriting: Assessment of borrower creditworthiness for loans.

Upside Potential: Expected property value or income increase.

Vacancy Rate: Percentage of unoccupied units in a property.

Vacate Notice: Tenant indication to leave a property.

Vacation Rental: Short-term property rental for holiday stays.

Waiver: Voluntary relinquishment of rights or obligations in a contract.

Walkthrough Inspection: Assessment pre- and post-lease of property condition.

Waterfall Structure: Sequence of property investment distribution.

X-factor: Unique property feature impacting its value or appeal.

Xeriscaping: Water-conserving landscaping, common in arid regions.

Yield: Return on investment generated by a property.

Yield Management: Strategy to optimize property revenue.

Yield Spread: Difference between loan interest rate and investor yield.

Zestimate: Estimated property value by Zillow.

Zoning: Regulations determining land use and development.

Zoning Variance: Permission allowing property use differing from zoning regulations.