Real Estate Investing Glossary
25 essential terms — because precise language is the foundation of clear thinking in Real Estate Investing.
Showing 25 of 25 terms
An IRS provision allowing investors to defer capital gains taxes by reinvesting sale proceeds into a like-kind replacement property.
The process of spreading mortgage payments over time so that each payment covers both interest and principal reduction.
The increase in a property's market value over time, whether from market forces or owner improvements.
Buy, Rehab, Rent, Refinance, Repeat: a strategy for recycling capital across multiple investment properties.
Net operating income divided by property value; a measure of unlevered return potential.
The net income remaining after all expenses and debt service payments have been deducted from rental income.
Annual pre-tax cash flow divided by total cash invested; measures return on actual capital deployed.
Fees and expenses paid at the completion of a real estate transaction, including title insurance, appraisal, and attorney fees.
A tax strategy that accelerates depreciation by reclassifying building components into shorter depreciation schedules.
The total amount of principal and interest payments made on a loan over a given period.
A tax deduction that accounts for the wear and tear of a building over its useful life (27.5 years residential, 39 years commercial).
Debt Service Coverage Ratio: NOI divided by annual debt service; measures ability to cover loan payments.
The investigation and analysis period before purchasing a property, including inspections, financial review, and title search.
The difference between a property's market value and the outstanding mortgage balance.
A government-insured mortgage allowing low down payments (3.5%) for owner-occupied properties of up to four units.
Gross Rent Multiplier: property price divided by gross annual rent; a quick valuation comparison tool.
A short-term, high-interest loan from a private lender, secured by the property itself rather than the borrower's creditworthiness.
Internal Rate of Return: the annualized return rate that accounts for the timing and magnitude of all cash flows.
Using borrowed capital to increase investment exposure, amplifying both potential gains and losses.
Loan-to-Value ratio: the mortgage amount as a percentage of the property's appraised value.
Net Operating Income: gross income minus operating expenses, excluding debt service and depreciation.
Real Estate Investment Trust: a company that owns income-producing real estate and distributes at least 90% of taxable income as dividends.
A document listing all tenants, their unit numbers, lease terms, and rental amounts for a property.
The percentage of all available rental units that are unoccupied at a given time.