A capital reserve is a fund created to finance major, long-term investments, property or infrastructure enhancements within a real estate property. These are set aside from profits and retained earnings specifically for future large scale repairs, renovations, or unexpected large expenses.
Carrying charges refer to the ongoing expenses necessary for holding a property, such as taxes, interest on loans, insurance, and maintenance costs. These charges are pertinent to both idle properties and properties under construction.
Constructive eviction occurs when a property becomes uninhabitable due to a landlord’s actions or failure to act, allowing tenants to terminate their lease.
The 'Cost to Cure' is the amount of money required to remedy a cause of depreciation in a property. A curable defect is one for which the cost to correct is less than the value added by the correction.
A Declaration of Restrictions is a set of restrictions filed by a subdivision or condominium developer, specifying rules that must be followed by property owners to maintain uniformity and uphold property values.
Holding costs, also known as carrying costs, are the expenses incurred by owning and maintaining a property over a period of time until it is sold or put to productive use.
A home inspector is a professional who evaluates the structural, mechanical, and various other conditions of a home prior to its sale, ensuring both the buyer and seller are aware of the home's condition.
Operating expenses in real estate refer to the costs incurred to operate and maintain a property. These include expenses like property taxes, utilities, hazard insurance, and maintenance, while excluding financing expenses and depreciation.
Physical life refers to the expected period of time during which a real estate improvement or structure is expected to remain physically intact and usable if proper maintenance is conducted.
In real estate, pitch primarily refers to the slope or angle of a roof, which can greatly influence the property's design, function, and appeal. 'Pitch' can also denote a thick black substance used in construction and maintenance, such as driveway pavement or roof patching.
Property management encompasses the oversight and operations necessary to maintain real estate properties, including rent collection, maintenance, and financial management.
Renovate refers to the process of upgrading or improving an existing structure, aiming to either restore it to its original condition or modernize it while preserving its general appearance. This process typically involves more extensive changes than remodeling but less than rehabilitating.
Repairs refer to work performed to restore a property to its original condition without extending its useful life. This term is distinct from capital improvements, which add value or extend the life of the property. In the context of income property, repairs are considered an operating expense for accounting and tax purposes.
Replacement reserve is a specific fund set aside from the net operating income to cover the eventual wear and tear of short-lived assets, such as carpeting, appliances, and other items that have a defined useful life.
A slumlord is a derogatory term used to describe a property owner or landlord who operates buildings in poor conditions, typically in a slum, and invests very little in the upkeep and maintenance of their rental properties. Such landlords often prioritize rent collection over ensuring their properties are habitable and safe.
Substandard housing refers to residential properties that do not meet the basic standards of safety, sanitation, and habitability as defined by local building or housing codes. This can include issues related to structural integrity, plumbing, electrical systems, and overall livability.
Termites are insects that bore into wood and destroy it, often leading to significant structural damage in properties.
