The Ultimate A-Z Rental Real Estate Dictionary (125+)
The world of rental real estate is a vast industry with many different technical terms, unofficial slang and acronyms. Our glossary of rental real estate terminology contains a comprehensive list of the essential terms every rental real estate investor needs to know.
A B C D E F G H I J K L O M N O P Q R S T U V W X Y Z
1031 Exchange – A 1031 exchange, named after Section 1031 of the U.S. tax code, is a strategy used in real estate investing to defer paying capital gains taxes on an investment property when it’s sold. To qualify, the investor must reinvest the proceeds from the sale into another “like-kind” property, essentially swapping one investment property for another. This method allows an investor to defer capital gains tax, which can lead to more funds being available for reinvestment.
A
Accredited Investor – An accredited investor is a person eligible to invest in unregistered securities (which are off-limits to retail investors) as defined by the SEC as those that have a net worth over $1 million, excluding primary residence (individually or with spouse or partner) and/or income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years, and reasonably expects the same for the current year.
Accounts Payable Statement – An accounts payable statement is a financial document that lists all the outstanding bills, or liabilities, that a property (owner or manager) owes to vendors and contractors or service providers at a specific point in time. These may include expenses for property maintenance, utilities, property management services, or mortgage payments, providing a clear overview of the property’s short-term financial obligations.
Accounts Receivable Statement – An accounts receivable statement is a statement that outlines all the money that is owed to the property (ownership or property management), typically in the form of rent or other fees, at a specific point in time. This statement includes details such as tenant names, the amount they owe, and when their payments are due, providing a clear overview of the property’s incoming cash flow.
Adjustable Rate – See “Variable Interest Rate”
After Repair Value (ARV) – After Repair Value (ARV) is an estimate of what a property will be worth on the market after necessary repairs and renovations have been completed.
Air Rights – Air rights in real estate refer to the legal right to control and use the space above a property, typically up to a certain height limit.
Americans With Disabilities Act (ADA) – The Americans with Disabilities Act (ADA) is a U.S. law that requires public and commercial buildings to meet certain accessibility standards to accommodate individuals with disabilities, including requirements for parking spaces, restroom facilities, door widths, ramp slopes, and more.
Anchor Tenant – An Anchor Tenant is a larger retail tenant which usually draws in a substantial majority of customers into the overall retail property.
Apartment – A multi-unit building, often 2 stories or more, that has only residential suites.
Appraisal – An appraisal is a fair market valuation of a particular property’s value based on a series of quantitative factors such as comparable sales and current property condition.
B
Balance Sheet – A balance sheet, when used in real estate, is a financial statement that shows the property’s assets, such as its current market value and any income it generates, against its liabilities, which could include a mortgage or other debts.
Balloon Payment – A balloon payment in real estate refers to a larger than usual lump sum payment that is due at the end of a loan term, typically after several years of smaller payments.
Basis Points (BPs) – Values equal to one-hundredth of one percentage point. For example, 100 basis points = 1 percentage point.
BRRRR – BRRRR is an acronym for Buy, Rehab, Rent, Refinance, and Repeat, which is a real estate investment strategy that involves buying a distressed property, rehabbing it, renting it out, cash-out refinancing newly appreciated equity, and repeating the process to acquire more rental properties.
Building Materials – Building Materials, also called Construction Materials, are the individual natural occurring or man made materials that are collectively used to construct a building.
Building Products – Building products are the processed and ready made finished items that are used in a modular fashion throughout the construction building process.
Buy and Hold – Buy and hold refers to a long-term real estate investment strategy where an investor purchases a property, rents it out, and continues to hold it for an extended period of time (usually 3-5 years), with the goal of generating rental income and realizing long-term property value appreciation .
C
Cap Rate (Capitalization Rate) – Cap Rate (Capitalization Rate) is the ratio of Net Operating Income (NOI) to Property Value and also a valuation metric used to estimate the expected rate of return when comparing multiple investment real estate properties.
Central Business District – Central Business District (Commonly called CBD) refers to the commercial and business center of a city.
Clear Height – Clear height is an industry term in industrial real estate that refers to the usable height to which a tenant can store its product on racking.
Closing Costs – Closing costs in real estate are the various fees and expenses related to finalizing a property transaction, typically paid at the time of closing when the title of the property is transferred from the seller to the buyer. These costs may include loan origination fees, title insurance, escrow fees, attorney fees, pre-paid property taxes and insurance, recording fees, and more. The total closing costs can vary but typically range a single digit percentage of the purchase price of the property.
Commencement Date – Commencement date refers to the day on which a tenant’s rights and obligations under the lease agreement begin, often coinciding with the start of their occupancy and rent payments. This is typically, but not always, the day on which the tenant takes possession of the leased space, which usually occurs upon substantial completion of the tenant improvements.
Commercial Property Management – Commercial property management operates non-residential properties such as retail spaces, offices buildings, and industrial warehouses. Like residential property management, commercial property management encompasses the tasks and responsibilities of operating an income-producing property.
Commercial Real Estate – Commercial real estate (CRE) is property (i.e. buildings and land) that is used solely for profit-generating business activities and often leased to commercial tenants for solely business purposes.
Commercial Real Estate Loan – Commercial Real Estate Loans, also known as “CRE loans”, are mortgages secured by a lien on a commercial property. Commercial real estate assets include income-producing office buildings, retail space, warehouses, and other types of properties used for business purposes.
Conforming Loan – See “Conventional Loan”
Construction Materials – See “Building Materials”
Contech – Construction technology is a term coined to identify the intersection of construction and technology that is used to innovate the planning, designing, and manufacturing in building.
Conventional Loan – A conventional loan (also called a conforming loan) for a rental property is a mortgage that is not insured or guaranteed by a government agency, such as the FHA or VA.
Cost Segregation – Cost segregation is a tax planning strategy used by real estate investors that accelerates the depreciation deductions a taxpayer can claim for certain property assets. It involves identifying and separating personal property assets, which can be depreciated over a shorter time frame, from real property assets that are depreciated over a longer period. This results in higher depreciation expense in the early years of property ownership, reducing taxable income, and thus lowering the tax liability.
Corporate Guarantee – A corporate guarantee is a specific type of guarantee where a corporation agrees to be held legally responsible for completing the duties and obligations of a commercial tenant, in the event that the tenant fails to fulfill the terms of the lease contract.
Coworking – Coworking is a business model that involves individuals or businesses sharing a collaborative workspace or office space, typically offering amenities such as desks, meeting rooms, internet, and other office related services.
Crowdfunding – Real estate crowdfunding is a method of raising capital for real estate investments through an online platform, typically by pooling small amounts of money from a large number of investors.
D
Data Center – Data centers are a type of specialized industrial property that house the technological hardware and related equipment used to store, process, distribute, and provide access to large amounts of data.
Debt – Debt is any type of loan or borrowed capital used to fund a real estate investment and is secured by a specified real estate property as collateral. In rental real estate, debt typically takes the form of a mortgage or deed of trust.
Deductions – Deductions refer to certain expenses related to owning, operating, and managing a rental property that can be subtracted from taxable income for tax purposes. Common examples include mortgage interest, property tax, operating expenses, depreciation, and repairs. These deductions can decrease the amount of income tax a property owner pays, effectively reducing the cost of owning and operating the rental property.
Development – See “Ground Up Development”
Debt-to-Income (DTI) – Debt-to-income is a ratio that is calculated by dividing a borrower’s total monthly debt payments (e.g. mortgage, car loans, credit card payments, etc.) by their gross monthly income. The result, expressed as a percentage, helps lenders assess a borrower’s financial stability to manage monthly payments. A lower DTI ratio is typically preferred as it indicates greater income to cover debt service.
Due Diligence – The comprehensive investigation and analysis of a property, including its legal, financial, and physical aspects, to identify potential risks and ensure a well-informed decision beforehand.
Duplex – A two-unit residential rental property.
E
Entitlement – The legal process of obtaining necessary approvals and permissions from government authorities to develop a property for a specific use or project.
Equity – Equity, in the context of real estate, is the value of a property minus any debt owed on the property. Equity can be calculated by taking a property’s current fair market value, and subtracting any debts against the property such as mortgages, second loans, or other obligations.
Escrow – Escrow is the process of holding money in the custody of a neutral third party of a transaction, in which funds can only transfer out when a specified condition has been fulfilled. Escrow is usually used in the sale process of a rental property.
F
FHA Loan – An FHA loan is a type of government-backed mortgage insured by the Federal Housing Administration (FHA), designed to help borrowers with lower credit scores and smaller down payments secure financing for a home purchase.
Fix and Flip – “Fix and flip” is a real estate investing strategy where an investor buys a distressed property at a discounted price, and then renovates and upgrades the property to improve its value, with the goal of selling it (‘flipping’) at a higher price for a profit.
Floating Rate – See “Variable Interest Rate”
Fractional Ownership – Real estate fractional ownership is a method of purchasing a share of a property, typically through a legal entity, where each investor owns a portion of the property and shares in the rental income and potential appreciation of the property.
Fourplex – See “Quadruplex”.
G
General Ledger – A general ledger is a comprehensive record that catalogs all the financial transactions associated with the property over its entire lifecycle. This includes revenues such as rental income, expenses like property taxes or repairs, and any changes in liabilities and equity, thus providing a detailed historical context for understanding the financial performance of the property.
Ground Up Development – Ground-up development is the process of constructing a real estate property from the raw land, into a new income-producing piece of real estate.
H
Hard Money Loan – A hard money loan is a type of asset-based real estate loan that is typically short-term, high-risk, high-yield, and is collateralized by a piece of real property.
High-Rise Apartments – A professionally managed residential building exceeding 10-12 stories and containing 100+ units.
Home Equity Line of Credit (HELOC) – Home equity line of credit (HELOC) is a rotating line of credit that you can draw against, secured with a lien against real property (either your home or an investment property). A HELOC works like a revolving credit line, similar to a credit card, wherein the borrower can draw funds up to a predetermined credit limit as needed and repay the balance over time.
Hospitality (Properties) – Hospitality properties are those that primarily serve travelers such as hotels, motels, lodges, cabins, hostels, and any other type of property for overnight stays.
Hospitality Property Management – Hospitality property management is a specialized type of real estate management that deals with the comprehensive oversight of operations for hospitality-related properties such as hotels, resorts, and restaurants.
House Hacking – House Hacking is a rental real estate investing strategy that involves renting part of a property out to generate income to generate additional rental income and/or reduce living expenses at the same time.
I
Income Statement – An income statement, also called a Profit and Loss Statement (P&L) summarizes the revenues (like rental income), and the expenses (like property taxes, maintenance, and insurance) incurred over a specific period of time. The difference between the total revenue and total expenses represents the net income or loss, providing insight into the rental property’s profitability.
Industrial – Often large buildings used for warehousing, manufacturing, and any other type of industrial economic use.
Interest Rate – Interest rate refers to the amount a lender charges a borrower for the use of money, expressed as a percentage of the principal loan amount.
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K
L
Land – Plots of land ranging in sizes from small to very large and also type depending on location such as agricultural outside of metropolitan cities, and infill land within urban cities.
Land Property Management – Land property management is a specialized type of real estate management that deals with the comprehensive oversight of day-to-day and long term management of land properties.
Lease – A lease is a legal agreement between a lessee (i.e. renter) and lessor (i.e. landlord or property owner) to use an asset or property for a period of time in return for lease or rental payments.
Leasing Fees – See “Property Management Fees”
Loan-to-Value (LTV) – In real estate financing, the Loan-to-Value (LTV) ratio is a financial metric that expresses the amount of a mortgage lien as a percentage of the total appraised value of the property, essentially reflecting the degree to which the property is leveraged. An example is a lender who goes up to 75% LTV will lend $75,000 against a $100,000 property.
Long Term Vacation Rental – A long-term vacation rental is the leasing out of a furnished living space for a period of time that is generally one month or longer.
M
Maintenance – Rental property maintenance is the act performing repairs, safety checks, and general upkeep throughout a rental property.
Mid-Rise Apartments – A residential building approximately 5-12 stories tall, containing 30-100 units, and elevator service.
Mixed Use – Buildings where the property may have a combination of uses, such as retail, office and apartments.
Multifamily – A multifamily property is any residential property that contains more than one housing unit. While they serve for residential dwelling, the general purpose for the property type is for investment (owner-occupied or not).
Multifamily Loan – A multifamily loan is any type of loan used by real estate investors to purchase or refinance residential multifamily properties including smaller multi-unit properties (2-4 units) and large apartment complexes (5+ units).
Multifamily Property Management – Multifamily property management is a specialized type of real estate management that deals with the administrative, financial, and operational tasks involved in managing residential properties that consist of multiple units within one complex or building. This can include rent collection, tenant relations, property maintenance, financial reporting, legal compliance, and other aspects that ensure smooth and profitable operation of the rental property.
N
New Construction – See “Ground Up Development”
NNN – See “Triple Net NNN”
Non-Accredited Investor – A non-accredited investor is any investor that does not meet the financial requirements of an Accredited Investor as defined by the SEC. See “Accredited Investor” for more information.
O
Offering Memorandum (OM) – An Offering Memorandum, often called an “OM”, is a comprehensive document that provides detailed information about a property being sold, including its features, financials, and legal aspects, to aid potential investors in making an informed decision about purchasing the property.
Office – Buildings where administrative work usually takes place. These often include spaces for Medical Centers and Professional Services (Lawyers/Accountants).
Opportunity Zone – An opportunity zone is a federally designated, economically-distressed area where private investments, under certain conditions, may be eligible for significant tax benefits. The key tax benefits include deferral of tax on prior capital gains, step-up in basis for capital gains reinvested in an opportunity zone, and potential exclusion from tax on profits from the sale of an investment in a Qualified Opportunity Fund if the investment is held for at least 10 years.
Owner Financing – See “Seller Financing”
P
Parking Lot – A parking property (also called a parking lot, car lot, or car park) is a piece of land that is primarily used for short to medium term parking of motor vehicles (cars, trucks, etc.). This can include both public and private parking lots.
Parking Property Management – Parking property management is a specialized type of real estate management that deals with the comprehensive oversight of parking-related properties such as surface lots and parking garages.
Personal Guarantee – A Personal Guarantee is a guarantee in which an individual agrees to be responsible for the financial obligations of a debtor or borrower to a lender, in the event that the debtor or borrower fails to pay an amount owing under the loan agreement.
PITIA – PITIA is an acronym in real estate finance, stands for Principal, Interest, Taxes, Insurance, and Association dues, which collectively represent the total monthly cost a property owner may expect to pay when owning a property.
Prefab Housing – Prefabricated housing (also called “prefab” or “prefabs”) is any dwelling structure that has sections of the structure manufactured in an off-site factory, and then subsequently transported to its intended site of use.
Private Notes – Real estate private notes are legal contracts between a borrower and a lender that outline the terms of a loan used to purchase real estate. The lender holds the note and receives regular payments from the borrower, which includes principal and interest, until the loan is paid off in full.
Profit and Loss Statement (P&L) – See “Income Statement”
Promissory Note – In real estate, a promissory note is a legally binding document in which a borrower agrees to repay a certain amount of money to a lender by a specified date, often including details about the repayment schedule, interest rate, and consequences of default. Often used in transactions like mortgages or seller financing, this note represents the borrower’s promise to pay back the loan for the property purchased.
Property Maintenance Software – Property maintenance software is any digital platform that is used to automate work orders, track asset information, and develop cost-optimized maintenance budgets.
Property Management – Property management (also known as rental management) – is the daily oversight of rental real estate by a third-party contractor.
Property Management Fees – Property management fees (also called leasing fees) are fees that property owners pay property management companies to ensure that their property is properly operated and maintained. They are usually paid on a monthly basis and can range from ongoing management fees, to one-time service specific fees.
Proptech – Property technology, commonly called proptech or real estate tech, is the software, tools, platforms, apps and other digital solutions used by real estate practitioners.
Property Manager (PM) – A Property Manager (PM) is a person whose job is to manage the daily routines of rental properties and preserve the value of the properties while generating income. Generally, property managers oversee management activities such as rent payments, repairs and maintenance, security, and general property upkeep.
Q
QSR (Quick Service Restaurant) – A QSR is a type of tenant that occupies a retail property with a “Quick Service” restaurant use that is generally a fast-food franchise such as McDonalds, Subway, or similar. QSR properties are usually freestanding but can also be in-line or end-cap.
Quadruplex – A four-unit residential rental property.
R
Real Estate Professional – A real estate professional is an individual who meets specific criteria outlined by the United States Internal Revenue Services (IRS) to be classified as such for tax purposes. To be considered a real estate professional, the individual must materially participate in rental property activities, meaning they are actively involved in the management and operations of properties on a regular, continuous, and substantial basis. By meeting these qualifications, real estate professionals may potentially offset rental property losses against their other income, providing valuable tax benefits.
REIT – A REIT, an acronym for Real Estate Investment Trust, is a type of financial security that invests in real estate directly, either through properties or mortgages, and can be traded like a stock on the major stock exchanges.
Rent Roll – A rent roll in real estate is a document or report that provides a detailed listing of all rental properties owned by a landlord or property management company, including information about each unit such as tenant names, lease terms, rental rates, and payment history.
Retail – Public facing storefronts such as shopping Centers, Malls (both indoor & outdoor), Neighborhood Plazas, Strip-Malls, and In-line retail in commercial corridors.
S
SBA Loan – An SBA loan is a commercial loan offered through banks and direct lenders, guaranteed by the U.S Small Business Administration, and used to finance real estate purchases and renovations. They offer favorable terms, including longer amortization periods and lower down payments, making them a popular choice for small businesses looking to acquire, build, or upgrade their commercial premises.
Self (Property) Management – Self (property) management is a type of rental property management where the owner oversees and handles all of the day-to-day operations of the rental property.
Self Storage – Self storage is the business of renting storage space, also known as “storage units,” to tenants, usually on a short-term basis. Self-storage tenants can include businesses and individuals.
Self Storage Property Management – Self storage property management is a specialized type of real estate management that deals with the comprehensive oversight of self storage properties such as drive up and indoor climate-controlled facilities.
Seller Financing – Seller financing, also known as owner financing, is an alternative method of financing a property purchase in which the seller of the property acts as the lender, providing a loan to the buyer. Instead of the buyer obtaining a mortgage from a traditional lender, such as a bank or mortgage company, they enter into an agreement directly with the seller to repay the loan over a specified period, usually at an agreed-upon interest rate.
Senior Housing – Senior housing (also called senior living or retirement homes) refers to multi-residence housing facilities that are intended for the elderly.
Senior Housing Property Management – Senior housing property management is a specialized type of real estate management that deals with the comprehensive oversight of senior living properties such as 55+ communities and skilled nursing facilities.
Single Family Property Management – Single family property management is the practice of overseeing and controlling all aspects of managing single-family rental properties, which are detached residential buildings designed to house one family.
Short Term Vacation Rental – A short-term vacation rental is the leasing out of a furnished living space for a short period of time – this can range from a few days to weeks.
Single Family Rental (SFR) – A Single Family Rental (SFR) Property is a stand alone detached structure usually on it’s own lot with a yard and garage, and rented out to tenants for the purpose of tenant dwelling and landlord profit.
Student Housing Property Management – Student housing property management is a specialized type of real estate management that deals with the comprehensive oversight of student housing properties such as off-campus apartments.
Suburban Office – Suburban office space refers to mid-rise office buildings that are located outside of a city center.
Syndication – Real estate syndication is a strategy where a group of investors pool their resources together to purchase and manage a larger real estate investment property than they would be able to afford individually.
T
Tenant Improvement (TI) – Tenant Improvements, often called just “TI”, is the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant.
Title – Title is a legal document and term that evidences a person’s or entities ownership rights to a piece of property, whether it be land, buildings, or other improvements.
Tenant Screening – Tenant screening is the act of evaluating prospective rental tenants based on a series of quantitative and qualitative factors.
Tenant Screening Software – Tenant screening software is the various digital platforms used to generate various reports on prospective tenants for the purpose of assessing the likelihood of a potential tenant to fulfill the terms of the lease agreement.
Triple Net (NNN) – Triple net (NNN) real estate is a type of lease agreement where the tenant is responsible for paying all three “nets” – property taxes, insurance, and maintenance – in addition to rent. This type of lease is commonly used in commercial real estate and can provide a stable income stream for property owners, as the tenant is responsible for covering the majority of the property’s operating expenses.
Trust Deed – See “Deed of Trust”
Triplex – A three-unit residential rental property.
Turnkey – Turnkey real estate refers to investment properties that are fully renovated and ready for immediate occupancy or rental, whereas the turnkey provider handles all aspects of the renovation and property management, making it an attractive option for investors who do not want to deal with the day-to-day responsibilities of property ownership.
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V
VA Funding Fee – The VA funding fee is a one-time payment that the Veteran, service member, or survivor pays on a VA-backed or VA direct home loan. This fee helps to lower the cost of the loan for U.S. taxpayers since the VA home loan program doesn’t require down payments or monthly mortgage insurance.
VA Loan – A VA loan is a type of mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) and is designed to help eligible American veterans, active-duty military personnel, and their surviving spouses obtain financing for purchasing, refinancing, or constructing a home.
Vacation Rental – A vacation rental is the renting out of a furnished private dwelling residence such as an apartment, house, or professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel.
Vacation Rental Management – Vacation rental management is the supervision and administration of vacation rental properties, ranging from handling bookings, cleaning, and maintenance, to marketing, and taking good care of the guest experience.
Value Add – Value add is a property investment method that involves taking a property through a renovation, in order to increase its value.
Variable Interest Rate – In real estate financing, a variable interest rate, also known as an adjustable rate, refers to an interest rate on a loan or mortgage that can change over time based on market conditions or an index rate, which may affect the cost of the loan and the borrower’s monthly payments.
W
Wholesaling – Real estate wholesaling is a strategy where an investor finds a motivated seller, enters into a contract to buy the property at a discount, and then assigns the contract to a third party, typically another investor or a fix-and-flipper, for a fee. The third party then takes over the contract and completes the purchase of the property.