Real Estate
50 Real Estate terms, defined in plain English — part of the 1345-term Finicade finance glossary. Each one has its own page, and links to the free game that teaches it.
- 1031 Exchange
- A 1031 exchange defers capital gains tax on an investment property by rolling proceeds into another one within strict 45- and 180-day deadlines.
- Absorption Rate
- Absorption rate measures how fast available properties sell in a market, usually expressed as months of inventory.
- Assessed Value
- Assessed value is what a local authority says a property is worth for tax purposes — often a fixed fraction of market value, updated on a slow cycle.
- BRRRR Method
- BRRRR is buy, rehab, rent, refinance, repeat — improving a property enough that a cash-out refinance returns your original capital to redeploy.
- Cap Rate
- The cap rate is a property's net operating income divided by its price — the unlevered yield if you bought it in cash.
- Cash-on-Cash Return
- Cash-on-cash return divides annual pre-tax cash flow by the cash you actually invested, so it captures the effect of the mortgage.
- Cash-Out Refinance
- A cash-out refinance replaces your mortgage with a larger one and hands you the difference in cash, tax-free because it's borrowed money rather than income.
- Closing Costs
- Closing costs are the fees due at completion — origination, appraisal, title, recording, legal, prepaid tax — typically 2–5% of the price for a buyer.
- Commercial Real Estate
- Commercial real estate is property held to produce income — office, retail, industrial, multifamily, hospitality.
- Comparative Market Analysis
- A comparative market analysis prices a property from recent sales of similar nearby homes, adjusted for differences in size, condition and features.
- Construction Loan
- A construction loan funds building work in staged draws released as milestones are inspected, with interest paid only on what's drawn.
- Contingency
- A contingency is a condition that must be met for a purchase to proceed: financing approval, a satisfactory inspection, an appraisal at price.
- Debt Service Coverage Ratio
- DSCR compares net operating income to annual debt payments, and commercial lenders typically require 1.20–1.25 as a minimum.
- Deed
- A deed is the legal document transferring ownership of property.
- Down Payment
- A down payment is the cash you put in up front, with the mortgage covering the rest.
- Earnest Money
- Earnest money is the deposit a buyer puts into escrow to show they're serious, typically 1–3% of the price, credited towards the purchase at closing.
- Easement
- An easement is another party's right to use part of your land for a specific purpose — a shared driveway, a utility corridor, a neighbour's access path.
- Equity Multiple
- The equity multiple is total cash returned divided by cash invested — a 2.0× means you doubled your money.
- Equity Waterfall
- An equity waterfall sets the order cash is distributed: return of capital, then a preferred return, then splits that shift towards the sponsor.
- Escrow
- Escrow is a neutral third party holding money or documents until conditions are met, so neither side has to trust the other.
- Fix and Flip
- Fix and flip is buying a property, renovating it and reselling quickly for profit.
- Foreclosure
- Foreclosure is the lender taking and selling a property after the borrower defaults.
- Gross Rent Multiplier
- The gross rent multiplier is price divided by annual gross rent — a quick screen that ignores expenses entirely.
- Hard Money Loan
- A hard money loan is short-term finance secured on a property value rather than the borrower credit, from private lenders at 10–15% plus points.
- Home Appraisal
- An appraisal is a licensed valuer's independent estimate of a property's market value, ordered by the lender to check that the collateral supports the loan.
- Home Inspection
- A home inspection is a professional examination of a property's condition — structure, roof, systems, drainage — commissioned by the buyer.
- Homeowners Association (HOA)
- An HOA governs a shared community, collecting dues for common areas and enforcing rules on what owners may do with their property.
- House Hacking
- House hacking is buying a property you live in while renting out part of it — a duplex unit, a spare room, a basement flat.
- Housing Affordability
- Housing affordability compares prices or rents to local incomes — as a price-to-income multiple, or the share of income spent on housing.
- Housing Starts
- Housing starts count new residential construction projects begun in a period, and they're one of the most-watched leading economic indicators.
- Lease Agreement
- A lease is the contract setting the terms of a tenancy — rent, duration, deposits, responsibilities, and how it ends.
- Lien
- A lien is a legal claim against a property securing a debt, which must be cleared before clean title can transfer.
- Mortgage-Backed Security (MBS)
- An MBS pools mortgages and sells claims on their payments to investors, which is what lets a lender originate a loan and immediately recycle the capital.
- Multiple Listing Service (MLS)
- The MLS is the shared database agents use to list properties and share commissions, and it's the source feeding public portals.
- Net Operating Income
- Net operating income is rental revenue minus operating expenses, before mortgage payments, tax and depreciation.
- Opportunity Zone
- Opportunity zones are designated low-income areas where investing realised capital gains defers the tax and, after ten years, eliminates it on the gain.
- Pro Forma
- A pro forma is the projected income statement for a property, showing expected rent, expenses and cash flow.
- Property Management
- Property management handles tenants, rent collection, maintenance and compliance on an owner's behalf, typically for 8–12% of collected rent plus a letting fee.
- Real Estate Commission
- Real estate commission is the percentage of a sale price paid to agents — historically 5–6% in the US and far lower in most other countries.
- Real Estate Investment Trust (REIT)
- A REIT owns income-producing property and must distribute most of its taxable income to shareholders, which is what makes it exempt from corporate tax.
- Real Estate Syndication
- A syndication pools investor money to buy a property too large for any of them alone, with a sponsor finding, financing and managing it.
- Rent Control
- Rent control caps how much rent can rise, protecting existing tenants from displacement.
- Rental Property
- A rental property is real estate held to produce income rather than to live in.
- Rental Yield
- Rental yield is annual rent as a percentage of a property's value — gross before costs, net after them.
- Security Deposit
- A security deposit is money a tenant lodges against damage and unpaid rent, refundable at the end of the tenancy.
- Short Sale
- A short sale is selling a property for less than the mortgage balance, with the lender agreeing to accept the shortfall.
- Title Insurance
- Title insurance protects against defects in a property's ownership history — an undisclosed heir, a forged signature, an unpaid contractor's lien.
- Triple Net Lease
- In a triple net lease the tenant pays property tax, insurance and maintenance on top of rent, leaving the landlord with a near-passive income stream.
- Vacancy Rate
- Vacancy rate is the share of rentable space sitting empty, and its inverse is occupancy.
- Zoning
- Zoning is the local rulebook governing what can be built where — use, height, density, parking, setbacks.