Real Estate Investing Flashcards
(80 cards)
1031 Exchange
powerful tax-deferment strategy for real estate held as an investment. It allows an investor to sell a property without paying capital gains on the sale.
Adverse Possession
Adverse possession, or a “Squatters rights”, is a legal ruling that transfers property ownership based on continuous occupany over an extended period of time
After- Repair Value (ARV)
ARV is the potential sales price of a home or investment property as determined by the market.
Amenity
An amenity is a desirable or useful feature or facility within a property structure. Amenities are typically features that are highlighted and pitched to renters when they are looking to rent at a certain complex.
Amortization
Amortization is the gradual process of an outstanding loan balance dropping over time as the borrower makes monthly payments
Appraiser
An appraiser is a trained, licensed professional tasked with evaluating a property to estimate its current fair value in the marketplace
Appreciation
Appreciation is the rise in value of an asset over time, typically relating to the value of an entire asset class, such as real estate, stocks, bonds, and currencies
APR
The Annual Percentage Rate, or APR, is the yearly amount that must be paid by a borrower in order to maintain and to pay off a loan.
Broker
A broker is a middleman, or matchmaker, who connects a buyer and a seller. In real estate, a broker’s job is to match homebuyers and home sellers, while being paid a commission.
Capital Expenditure
Capital expenditures (CapEx) are investments in long-term, fixed assets—like a new roof or company equipment. Learn more at the BiggerPockets Glossary.
Capital Gains Tax
When you sell an asset for more than you paid for it, you trigger what is called a capital gains tax—but there are ways to avoid paying this pricey tax.
Capitalization Rate aka “Cap Rate”
The capitalization rate is the rate of return an investor can expect from their real estate properties, calculated by dividing the income by the market value.
Cash-Out Refinance
A cash-out refinance allows homeowners to take out a new mortgage and receive additional cash, which can be used for renovations or debt pay-off.
Closing Costs
Closing costs are payments by both buyers and sellers that occur during a real estate transaction, such as the sale or purchase of a house.
Comparative Market Analysis (CMA)
A comparative market analysis (CMA) looks at similar properties to help a real estate investor, seller, or buyer determine a home sale or offer price.
Consumer Price Index
The Consumer Price Index is a vital economic indicator that measures how much the cost of consumer goods and services increase over a year.
Debt - to - Income Ratio (DTI)
The debt-to-income ratio calculates the ratio of monthly debt to gross income. Lenders use this number to understand how much house a buyer can afford.
Deed
A deed is the document showing proof of ownership for land or property. Learn more about this essential element of the real estate buying and selling process.
Default
Default is the failure to repay a debt, such as a mortgage. This can lead to eviction and foreclosure and can dramatically affect a borrower’s credit.
Depreciation
Depreciation is how goods and assets lose value. But that’s not a bad thing—for savvy investors, it’s a tax strategy. Learn more about depreciation here.
Downturn
An economic downturn happens when a country’s gross domestic product turns stagnant or starts to fall due to decreased consumer confidence. It can lead to a recession.
Dual Agency
Dual agency is when a real estate agent represents both the buyers and the sellers in a transaction. It’s typically a bad idea—here’s why.
Earnest Money
When purchasing real estate, earnest money—or a good faith deposit—shows sellers you’re serious. Learn more about this step in the home-buying process here.
Egress
Egress is another word for “a way to get out.” When buying real estate or expanding a basement, you’ll want to follow local code. Here’s what you should know.
