Glossary of Property Management, Real Estate Investing, and Rental Terms

Jump to:

A

  • Accelerated Depreciation: A tax method allowing property owners to deduct larger depreciation expenses in the early years of ownership, resulting in greater tax benefits upfront compared to straight-line depreciation.
  • Addendum: A written document attached to a lease that modifies or supplements the original agreement.
  • Affordable Housing: Housing made available at reasonable prices for individuals with low to moderate incomes.
  • After Repair Value (ARV): The estimated market value of a property after all planned repairs, renovations, and improvements have been completed, commonly used by real estate investors and house flippers to determine potential profitability of investment properties.
  • Agent: A licensed professional authorized to represent buyers, sellers, landlords, or tenants in real estate transactions, acting as a fiduciary with legal responsibilities to their clients while handling property showings, negotiations, and paperwork.
  • Amenities: Features such as pools, gyms, or parking spaces that enhance a property’s comfort and appeal.
  • Apartment: A rental unit or set of rooms within a larger building or complex.
  • Appraised Value: The professional assessment of a property’s value, typically conducted by a licensed appraiser.
  • Appreciation: The increase in a property’s value over time.
  • Arbitration: A dispute resolution process where an impartial third party makes a binding decision outside of court.
  • As-Is Condition: A property sold or rented without warranties and in its current state, with the buyer/tenant accepting all existing defects.
  • Asbestos: A group of naturally occurring fibrous minerals once commonly used in building materials that poses serious health risks when disturbed, requiring specialized handling, testing, and removal procedures governed by strict regulations.
  • Asset Allocation: The strategy of distributing investments across various asset classes to manage risk.
  • Assessed Value: The valuation placed on a property by tax authorities for determining property taxes.

B

  • Balance Sheet: A financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point in time, providing property owners and investors with a snapshot of what they own, what they owe, and their net worth.
  • Bird Dog: An unlicensed person who locates potential real estate investment opportunities for investors or wholesalers, earning fees or commissions for finding undervalued properties, distressed sellers, or off-market deals.
  • Brownstone: A building or structure made from a specific type of soft sandstone, often seen in urban areas.
  • BRRRR (Buy, Rehab, Rent, Refinance, Repeat): A strategy for acquiring, improving, and leveraging rental properties.
  • Bridge Loan: A short-term loan used to finance a property until permanent financing is secured.
  • Broker: A real estate professional with advanced licensing who may own a brokerage, supervise agents, and typically has more extensive education and experience than agents, allowing them to operate independently and receive commissions directly from clients.
  • Brokerage: A real estate company licensed to represent buyers and sellers in property transactions, typically employing multiple agents under the supervision of a broker, and providing services such as listings, marketing, transaction management, and commission distribution.
  • Building Codes: Regulations that determine construction standards to ensure safety and functionality.
  • Buy-and-Hold Strategy: A real estate investment approach where properties are purchased and held long-term.

C

  • Cap Rate: A metric that helps evaluate the profitability of an investment property, expressed as a percentage.
  • Capital Expenditure (CapEx): Funds spent on major property improvements or repairs that add value.
  • Capital Gain: The profit earned when a property is sold for more than its purchase price.
  • Capital Improvement: Upgrades or renovations to a property that increase its value or utility.
  • Cash for Keys: A strategy where landlords or property owners offer tenants money to vacate a property voluntarily and promptly.
  • Cash Flow: The net income generated by a property after all expenses are deducted.
  • Cash-on-Cash Return: A measure of a property’s annual return based on the cash investment made.
  • Certificate of Occupancy: A document certifying that a property complies with building codes and is safe to occupy.
  • Certificate of Title: A legal document establishing ownership of a property.
  • Chart of Accounts: A structured list of all financial accounts used in an organization’s general ledger, typically arranged with asset accounts first, followed by liabilities, equity, revenue, and expense accounts, serving as the foundation for organizing and tracking real estate income and expenses.
  • Closing Costs: Fees and expenses incurred during the purchase or sale of a property.
  • Co-Applicant: A secondary applicant who shares responsibility for a mortgage or loan.
  • Commercial Property: Real estate used for business purposes, such as offices or retail spaces.
  • Common Area: Shared spaces within a property, like lobbies or hallways, accessible to all tenants.
  • Common Area Maintenance: Expenses associated with maintaining shared areas of a property.
  • Comparative Market Analysis (CMA): A report used to determine a property’s market value based on similar properties.
  • Condominium: A property type where individuals own their units within a shared building or complex.
  • Contract for Deed: An agreement where the buyer pays for a property in installments while the seller retains the title until full payment is made.
  • Cooperating Broker: A real estate broker who finds a buyer for a property listed by another broker, working collaboratively with the listing broker to complete the transaction while representing the buyer’s interests and sharing in the commission offered by the listing broker.
  • Cooperative: A property ownership structure where residents own shares in a corporation that owns the building, giving them the right to occupy specific units and participate in building governance through a board of directors.
  • Crowdfunded Real Estate: Pooling funds from multiple investors to purchase real estate projects.
  • Curb Appeal: The visual attractiveness of a property when viewed from the street.

D

  • Debt Service: The cash required to cover loan payments including principal and interest.
  • Deed of Trust: A legal document used in some states instead of a mortgage to secure a real estate loan.
  • Demand Letter: A formal notice requesting payment or action from a tenant, often preceding legal proceedings.
  • Depreciation: The loss of a property’s value over time due to wear and tear or aging.
  • Depreciation Recapture: The tax liability that occurs when a depreciated real estate asset is sold for more than its depreciated value, requiring investors to pay taxes on previously claimed depreciation deductions at a rate up to 25%.
  • Distressed Sellers: Property owners forced to sell due to financial hardship, often needing to sell quickly and potentially at below-market prices.
  • Down Payment: A partial upfront payment made when purchasing a property, usually a percentage of the total price.
  • Due Diligence: The thorough investigation process conducted before purchasing or investing in a property.
  • Duplex: A building with two separate residential units, typically side by side or one above the other.

E

  • Earnest Money: A deposit made by a buyer to show serious intent to purchase a property.
  • Effective Rent: The average rent collected after factoring in promotions or concessions.
  • Emergency Maintenance: Urgent repairs required to address issues that threaten health, safety, or property integrity.
  • Escrow: A financial arrangement where a third party holds funds until conditions are met.
  • Estoppel Certificate: A document verifying the terms and conditions of a tenant’s lease.
  • Equity: The value of an owner’s interest in a property, calculated as the difference between market value and owed debt.
  • Eviction: The legal process by which a landlord removes a tenant for violating lease terms.

F

  • Fair Housing Act: Federal law prohibiting discrimination in housing based on protected characteristics.
  • Fair Market Rent: The estimated rental price a property can command in the open market.
  • Fair Market Value (FMV): The price at which a property would sell on the open market between a willing buyer and seller, both having reasonable knowledge of relevant facts and neither being under pressure to complete the transaction.
  • First Right of Refusal: A contractual right giving a party the option to enter a transaction before others.
  • Fiscal Year: A 12-month period used for financial reporting and budget planning.
  • Fix-and-Flip: A strategy where properties are purchased, renovated, and sold for a profit.
  • Floor Area Ratio (FAR): A zoning measurement of building floor space relative to the size of the property lot.
  • Foreclosure: The legal process in which a lender takes ownership of a property due to unpaid debt.

G

  • General Contractor: A professional responsible for overseeing construction projects, coordinating subcontractors, obtaining permits, and ensuring work meets building codes and quality standards for property development, renovation, or improvement projects.
  • General Partner: A partner who assumes full liability for partnership debts and has authority to make binding decisions on behalf of the partnership.
  • Gross Lease: A lease where the tenant pays a fixed rent, and the landlord covers property expenses like utilities.
  • Gross Rent: The total rental income collected before deducting expenses.
  • Ground Lease: An agreement where the tenant rents the land and may build on it but does not own the land.
  • Guarantor: A person who guarantees payment if the tenant fails to pay rent.

H

  • Hard Money Loan: A short-term loan secured by real property, often used by investors.
  • Holdover Tenant: A tenant who remains in possession of a property after their lease has expired.
  • Home Equity Line of Credit (HELOC): A revolving credit line secured by a property, allowing homeowners to borrow as needed.
  • Homeowners Association (HOA): An organization that governs properties in a community and collects fees for maintenance and services.
  • Housing Code: Local regulations establishing minimum standards for residential properties.

I

  • Implied Warranty of Habitability: A legal doctrine requiring landlords to maintain properties in livable condition.
  • Income Property: A property purchased to generate rental income or profits from appreciation.
  • Inspection Contingency: A condition in a real estate contract allowing the buyer to back out based on property inspection results.
  • Internal Rate of Return (IRR): A measure of an investment’s overall profitability over time.
  • Inventory: A detailed list of a property’s contents and condition at move-in and move-out.
  • Investment Property: Real estate purchased primarily for earning rental income or appreciation.

J

  • Joint and Several Liability: A legal term meaning each tenant is responsible for the entire rent amount.
  • Joint Tenancy: A type of property ownership where two or more people share equal ownership rights.

K

  • Key Money: Funds paid to a landlord or previous tenant to secure a rental unit.

L

  • Landlord: A property owner who rents out their property to tenants.
  • Landlord Insurance: A type of insurance policy protecting landlords from property damage and loss of rental income.
  • Lease Agreement: A binding contract between landlord and tenant outlining rental terms.
  • Leasehold Estate: A tenant’s right to occupy a property for a specific period under a lease.
  • Legal Description: A formal property description used in official records.
  • Lessee: A tenant who rents property from a landlord.
  • Lessor: A landlord or property owner leasing a property to tenants.
  • Lien: A legal claim against a property for unpaid debts or obligations.
  • Like-Kind Property: Real estate assets that can be exchanged without incurring capital gains taxes in a 1031 exchange, where properties are considered “like-kind” if they’re of the same nature or character, regardless of differences in grade or quality (examples include exchanging apartment buildings for office buildings or raw land for improved real estate).
  • Likely ROI: An estimate of the potential return on investment for a property.
  • Limited Liability Company (LLC): A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability protection of a corporation.
  • Limited Partner: An investor in a limited partnership who contributes capital but has restricted liability that typically doesn’t exceed their investment amount, with no involvement in day-to-day management decisions or operations.
  • Loan-to-Value Ratio (LTV): The ratio of a loan amount to the appraised value of a property.

M

  • Managing Partner: A partner authorized by the members to manage and run the affairs of a partnership or LLC.
  • Market Rent: The rental price a property can achieve in the current market.
  • Master Association: An overarching HOA responsible for managing larger community developments.
  • Master Lease: A legal agreement where a lessee (master tenant) rents an entire income-producing property and then subleases individual units to multiple occupant tenants.
  • Material Fact: Important information that could affect a person’s decision to rent or buy property.
  • Modified Gross Lease: A lease structure where property expenses are shared between tenant and landlord.
  • Month-to-Month Tenancy: A rental agreement with no fixed term that continues until terminated by either party.
  • Mortgage: A loan used to purchase property, with the property itself serving as collateral.
  • Multi-Family Property: Residential buildings with multiple separate living units, such as duplexes or apartment complexes.

N

  • Net Operating Income (NOI): A calculation of rental property profitability after deducting operating expenses.
  • Non-Performing Loan (NPL): A loan where the borrower has stopped making scheduled payments for an extended period (typically 90-180 days), causing the lender to classify it as in default.
  • Non-Recourse Loan: A loan where the lender cannot pursue the borrower personally if the borrower defaults.
  • Notice to Quit: A formal document demanding a tenant vacate a property.

O

  • Occupancy: The state of a property being occupied by tenants.
  • Occupancy Rate: The ratio of rented or used space to the total amount of available space in a rental property.
  • Off-Market Deals: Real estate transactions for properties not publicly advertised on the MLS or other traditional marketing channels.
  • Operating Agreement: A legal document that outlines the ownership structure and operating procedures of a Limited Liability Company (LLC), defining members’ rights, responsibilities, profit distributions, and management protocols for real estate holdings and other business activities.
  • Operating Expense Ratio: The proportion of operating expenses to a property’s income.
  • Opportunity Zone: A tax-advantaged area designated for economic development.
  • Option to Purchase: A provision giving a tenant the right to buy the rental property.
  • Overhead: Indirect costs associated with operating a property management business.

P

  • Passive Income: Earnings generated without active involvement, such as rental income.
  • Percentage Rent: An additional lease payment based on a tenant’s revenue in commercial properties.
  • Pet Deposit: A refundable or non-refundable fee paid to cover potential pet damages.
  • Pocket Listings: Properties that real estate agents keep “in their pocket” rather than publishing on the MLS.
  • Pre-Approval Letter: A lender’s statement showing a buyer’s creditworthiness and loan amount eligibility.
  • Pre-Foreclosure: The initial phase of the foreclosure process that begins when a homeowner defaults on mortgage payments (typically after 90-120 days), during which the lender issues a notice of default and the property owner still has opportunities to resolve the delinquency.
  • Principal Balance: The outstanding amount owed on a loan, excluding interest.
  • Property Appraisal: The evaluation of a property’s market value by a licensed professional.
  • Property Maintenance: Routine upkeep and repairs to keep a property in good condition.
  • Property Management: The operation, maintenance, and oversight of real estate investments.
  • Property Tax Assessment: Official valuation of property for tax purposes.
  • Prorated Rent: Partial rent calculated for a period less than a full rental term.

Q

  • Quiet Enjoyment: A tenant’s right to peacefully occupy a rental property without landlord interference.
  • Quitclaim Deed: A legal instrument transferring ownership rights without guaranteeing clear title.

R

  • Real Estate Investment Trust (REIT): A company that owns and manages income-generating real estate.
  • Rescission: The cancellation of a contract, returning parties to their positions before the agreement.
  • Refinance: The process of replacing an existing mortgage with a new loan under different terms.
  • Rent Control: Government-imposed limits on the amount landlords can charge for rent.
  • Rent Roll: A document listing all rental income from a property.
  • Renters Insurance: A policy protecting tenants’ personal belongings and liability coverage.
  • Replacement Reserve: Funds set aside for future property repairs or replacements.
  • Rental Yield: A measure of annual rental income relative to the property’s value.
  • Rider: A supplement to a lease that addresses specific issues not covered in the standard agreement.

S

  • S Corporation (S Corp): A special business structure that allows income, losses, deductions, and credits to pass through to shareholders for federal tax purposes while providing liability protection.
  • Section 8: A federal Housing Choice Voucher Program administered by HUD that assists low-income families, elderly, and disabled individuals with affordable housing in the private market.
  • Security Deposit: A payment made by tenants to cover potential damages or unpaid rent.
  • Seller Financing: Also known as a seller carryback, an arrangement where the property seller acts as the lender, allowing the buyer to make payments directly to the seller rather than obtaining a conventional mortgage.
  • Short Sale: A real estate transaction where a lender agrees to accept less than the mortgage amount owed by the current homeowner.
  • Silent Partner: A passive investor who provides funding for a business but remains uninvolved in daily operations or public-facing activities, also known as a limited partner with liability typically limited to their investment amount while receiving agreed-upon portions of profits.
  • Single-Family Home: A property designed for occupancy by one household.
  • Special Assessment: An additional fee charged to property owners for specific improvements or services.
  • Squatter: An individual occupying a property without the legal right to do so.
  • Student Housing: Residences intended for college or university students.
  • Sublease: An arrangement where the tenant rents the property to another person.
  • Subletting: The act of renting out a leased property to someone else.
  • Subrogation: The substitution of one person or entity for another regarding a legal right or claim.
  • Syndication: A partnership pooling resources to invest in large real estate deals.

T

  • Tax Deferred Exchange: A transaction also known as a 1031 exchange that allows real estate investors to postpone paying capital gains taxes by reinvesting proceeds from the sale of an investment property into a similar “like-kind” property within specific IRS timeframes.
  • Tax Lien: A legal claim against property for unpaid taxes.
  • Tenancy: The possession or occupancy of property under a lease agreement.
  • Tenant Improvement: Upgrades or modifications to a rental property made by or for a tenant.
  • Tenant Screening: The process of evaluating potential tenants’ suitability.
  • Term Sheet: A document outlining key terms of a real estate deal.
  • Title Company: A firm ensuring the legitimacy of property ownership during transactions.
  • Title Search: An examination of public records to confirm a property’s legal ownership and identify encumbrances.
  • Townhouse: A multi-story home attached to others, sharing walls on one or both sides.
  • Triple Net Lease: A lease where tenants pay for property taxes, insurance, and maintenance in addition to rent.
  • Triplex: A building divided into three separate living units.
  • Turnkey Property: A fully renovated property ready for immediate occupancy.
  • Turnover Rate: The frequency at which rental units become vacant and require new tenants.

U

  • Underwriting: The process lenders use to assess financial risk before approving a loan.
  • Useful Life: The estimated time period an asset is expected to remain functional.
  • Utility Allowance: A reduction in rent for tenants who pay their own utilities.

V

  • Vacancy Rate: The percentage of unoccupied rental units in a property or market area.
  • Variance: A permitted deviation from zoning or building code requirements.

W

  • Walkthrough: An inspection of a rental property before move-in or after move-out.
  • Warranty Deed: A legal document guaranteeing the seller has clear title and can transfer ownership.
  • Wear and Tear: Normal deterioration of a property from ordinary use.
  • Weighted Average Cost of Capital (WACC): The average rate of return an investor is expected to pay for financing.
  • Wholesaling: Contracting a property and selling the contract to another buyer for a fee.
  • Workforce Housing: Affordable rental options for middle-income workers.

X

  • Xeriscape: A landscaping approach that reduces or eliminates the need for irrigation by using drought-tolerant native plants and efficient design principles.

Y

  • Yield Maintenance: A prepayment penalty designed to make lenders whole when borrowers pay off loans early.
  • Year-Over-Year (YOY): A comparison of data between equivalent periods in consecutive years.

Z

  • Zoning: Municipal regulations determining how property in specific geographic zones can be used.
  • Zero Lot Line: A property built directly on the property line, maximizing usable land area.


🤞 Get more real estate tips!

We don’t spam! Read more in our privacy policy