A call option is a financial contract that gives the option buyer the right, but not the obligation, to purchase a specific quantity of an asset at a predetermined price within a specified time period.
The Compound Annual Growth Rate (CAGR) represents the mean annual growth rate of an investment over a specified period of time longer than one year.
Financial leverage refers to the use of borrowed funds to increase an investment's potential return. While it can amplify returns, it simultaneously increases the risk of loss.
Functional vacancy refers to the phenomenon in real estate where space remains intentionally vacant due to it being uneconomical to market or part of a broader investment strategy.
An income stream refers to a regular flow of money generated by a business or investment. It can come from various sources such as rentals, dividends, interest, or any other form of residual income.
A land sale-leaseback is a financial transaction where the owner of a piece of land sells it to an investor and simultaneously enters into a lease agreement to continue using the land for a specified period.
An option in real estate refers to the right to purchase or lease a property upon specified terms within a specified period.
Paper profit refers to the unrealized gain in value of a property which would be realized if the property were sold at its current market value. As long as the property remains unsold, the profit remains a 'paper' valuation and is not actual profit.
A passive investor is an individual who invests money into a business, project, or property without taking an active role in managing or operating it. This hands-off approach allows investors to potentially earn income while leveraging the expertise and efforts of others.
Pyramiding is an investment strategy that seeks to build a portfolio by reinvesting the proceeds from sales, or by refinancing existing properties into higher-valued properties using leverage.
A Real Estate Operating Company (REOC) is a publicly traded real estate company that chooses not to adopt the tax status of a Real Estate Investment Trust (REIT), allowing it to reinvest earnings and operate without restrictions on the type of real estate businesses it conducts.
A situation in real estate where financial benefits from ownership accrue at a lower rate than the mortgage interest rate, leading to negative financial implications for the property owner.
Risk vs. Reward is a financial concept that attempts to compare the potential fluctuations, especially the downside, with potential benefits of an investment or financial decision.
An UPREIT (Umbrella Partnership Real Estate Investment Trust) is a specialized form of REIT (Real Estate Investment Trust) created by combining properties from existing limited partnerships. Original partners exchange properties for an interest in a new, transitional operating partnership, which might later be converted to shares in the REIT.
