Miscellaneous income in real estate refers to revenue generated from operating a property, excluding rental income. This additional income can come from various ancillary services and fees associated with the property.
To alleviate, reduce, or abate a penalty, punishment, or damage in a real estate context. Often involves actions such as mitigating financial obligations or physical damage to property.
The Modified Accelerated Cost Recovery System (MACRS) is a method of depreciation used for income tax purposes in the United States. It allows for the accelerated depreciation of property over specified recovery periods.
A Month-to-Month Tenancy Lease is a rental agreement that can be extended or terminated each month by either party, providing flexibility for both landlords and tenants.
The National Apartment Association (NAA) is a trusted organization that advocates for the rental housing industry, providing services, education, and standards for industry professionals.
The National Apartment Association (NAA) serves as an advocate, resource, and essential figure in the multifamily housing industry, providing industry-specific education, best practices, and valuable resources for apartment rental stakeholders.
A national tenant is a lessee with a presence across many or most of the United States. These entities are typically well-known and have better credit compared to local tenants, making them desirable for commercial property owners and lenders.
Negative cash flow occurs when an income-generating property allows more expenses than revenue within a given period, causing the property owner to cover the shortfall from other investments or personal savings.
Net Leasable Area (NLA) refers to the total floor space within a building that is available for rent to tenants, excluding common areas such as hallways, elevators, and mechanical rooms. NLA is a crucial metric for property owners and investors to determine the rentable value of a commercial real estate property.
Net Leasable Area (NLA) represents the precise space within a commercial property that can be rented to tenants. It is a critical metric for landlords and investors when estimating potential rental income.
Net Operating Income (NOI) is a key performance metric used to evaluate the profitability of income-generating real estate assets. It represents the income produced by a property after deducting all operating expenses but before accounting for taxes, interest, depreciation, and amortization.
Net Rentable Area (NRA) refers to the usable space available for lease to tenants in a commercial property, excluding certain areas such as common areas, elevator shafts, and emergency stairwells. This metric is essential for determining the true income potential of a property.
Net Spendable Income, also known as After-Tax Cash Flow, refers to the actual cash flow available to an investor after accounting for all operating expenses, debt service, and taxes.
An obligee is the person or entity in whose favor an obligation is entered into and who has the right to demand the fulfillment of that obligation from the obligor.
An occupancy permit, also known as a certificate of occupancy, is an essential document that certifies a building's compliance with local building codes and laws, permitting its use for commercial or residential purposes.
The occupancy rate is a key performance indicator in the real estate industry, representing the percentage of currently rented or occupied units in a building, neighborhood, or complex. A high occupancy rate generally indicates strong demand for the property.
An occupancy report provides a comprehensive summary of a building's occupancy status, detailing pertinent information about tenants, vacant spaces, and leasing terms. This report is essential for property managers, owners, and investors to assess the property’s performance and make informed decisions.
An office building is a structure primarily used for conducting business activities such as administration, clerical services, and client consultations. These buildings can vary in size and may house one or multiple business concerns.
On-site refers to operations or services performed directly at the location, often related to property management, development, or various other activities.
The Operating Expense Ratio (OER) is a key metric used in real estate to measure the efficiency of a property's management by comparing its operating expenses to its potential gross income. A lower OER indicates a more efficiently managed property.
Operating Statements are comprehensive financial reports that provide detailed insight into the cash flow generated by a property, offering a snapshot of its financial health.
Municipal rules governing the use of land that provide specific regulations and guidelines for various land-related practices.
In the context of condominium or cooperative housing, 'paint-to-paint' defines the boundaries of exclusive unit ownership. The ownership typically extends to the interior walls, floors, and ceilings, described as being from 'paint to paint,' with the housing complex retaining ownership and responsibility for common structural elements like walls separating the units.
A parcel is a defined piece of property under one ownership. It can be a standalone lot or part of a larger subdivision.
Parking ratio refers to the number of parking spaces provided per 1,000 square feet of gross leasable area (GLA) in a property, ensuring adequate parking for tenants and visitors.
A Periodic Estate, also known as periodic tenancy, is a type of lease agreement that automatically renews at the end of each lease period unless either party provides notice of intention to terminate the agreement.
Positive cash flow in real estate indicates that rental income exceeds property-related expenses, ensuring profitability and sustainability.
Potential Gross Income (PGI) represents the total rental income a property could generate if it were fully occupied at market rental rates and without any deduction for vacancies, rental concessions, or collection losses.
Preleasing involves obtaining lease commitments for a property prior to its availability for occupancy, often required for securing permanent mortgage financing.
A Primary Lease is an agreement between a property owner (landlord) and a tenant that may be partially or wholly subleased to another tenant.
Pro rata is a Latin term meaning 'in proportion' or 'according to the rate.' In a real estate context, it refers to the equitable distribution of costs, profits, or liabilities based on the share of ownership or participation.
Property management encompasses the oversight and operations necessary to maintain real estate properties, including rent collection, maintenance, and financial management.
A pylon sign is a freestanding sign commonly mounted on a pole or pylon structure, designed to be visible from a distance. These signs are often used to list tenants in a shopping center or to display business names and logos prominently along roadways.
A quadraplex, also known as a four-plex, is a type of real estate property that consists of four separate units within one building. Each unit can be rented out individually, offering multiple income streams for property investors.
An audit in the context of real estate refers to the inspection and evaluation of financial records and procedures, conducted by a Certified Public Accountant (CPA) or other qualified individuals. It ensures that the financial aspects of real estate transactions, ownership, and management are accurately and fairly presented.
Real Estate Information Systems (REIS) are technological platforms designed to gather, store, analyze, and manage data related to real estate operations. They are essential for streamlining property management, facilitating transactions, and providing sophisticated market analysis.
Real Estate Owned (REO) refers to properties that a lender, typically a bank, has acquired through foreclosure. These properties are held in the lender's inventory until they are sold.
A reappraisal lease (also known as a revaluation lease) involves periodically reassessing the value of the leased property to adjust the rent accordingly based on prevailing market conditions. This ensures both the lessor and lessee engage under fair market terms over the lease duration.
A recapture clause is a provision in a contract that allows the party granting an interest (such as a lease) to take it back under specific conditions. Common in commercial leases, this clause provides a landlord the option to retake leased premises if the tenant's performance—usually measured by sales or revenue—falls below a defined threshold.
A receiver is an individual or entity appointed by a court to manage, oversee, and maintain a property that is involved in ongoing litigation to ensure that the property is preserved and managed properly.
Rehabilitating a property involves restoring a structure to a condition of good repair, making it functional and habitable again, and potentially increasing its value.
Rent refers to the payment made by a tenant for the use of a landlord's property, which can be residential, commercial, or industrial. It is a fundamental concept in real estate, encompassing various types and factors that determine its amount and structure.
Rent Interruption Insurance, also known as Rental Income Insurance, provides compensation to rental property owners for the loss of rental income that occurs if the property becomes uninhabitable due to a covered peril like fire, storm, or vandalism.
A Rent Roll is a detailed list of individual tenants within a property, typically including information such as unit numbers, lease agreements, monthly rents, and lease expiration dates. It serves as a critical document for property management, providing an overview of rental income and tenant occupancy status.
The Rent-Free Period is a portion of the term of a lease during which no rent is required. It is typically offered by a landlord as a rental concession to attract tenants.
The rent-up period refers to the span of time it takes for newly constructed properties or newly vacated buildings to achieve full occupancy through tenant leasing. This phase is crucial for property owners and developers as it significantly impacts potential revenue and return on investment.
A rental agreement, often referred to as a lease, is a legal contract between a landlord and a tenant that outlines the terms under which the tenant agrees to rent a property owned by the landlord.
Rental income represents the actual amounts collected from tenants for the use of space. It does not include miscellaneous income such as laundry income or special fees. Understanding rental income is crucial for real estate investors and property managers to gauge the profitability of a property.
The rental rate is the periodic charge per unit for the use of a property. The period may be a month, quarter, or year, and the unit may be a dwelling unit, square foot, or other unit of measurement.
Reorientation refers to the strategic process of changing the market appeal of a property to attract a different target audience, often to enhance its occupancy and profitability.
A reserve fund is an account set aside to cover future building maintenance expenses, mortgage obligations, and other forthcoming financial requirements. These funds can be mandated by lenders, such as escrows, to ensure timely payments for property-related costs.
Reserves in real estate refer to amounts of money set aside to cover potential economic setbacks or to replace worn-out assets in property management and development.
A Resident Manager is a person who resides within an apartment complex or residential community and takes on the responsibility of managing aspects of the property, including maintenance, tenant relations, and other operational tasks.
A reverse exchange is a strategic real estate transaction where the buyer acquires a new property before relinquishing their old property, often to meet IRS Section 1031 requirements.
A sale-leaseback allows the owner of a property to sell it and simultaneously lease it back from the buyer, converting from owner to tenant while freeing up capital for other uses.
A sandwich lease is a real estate arrangement in which a lessee becomes a lessor by subletting the property. This intermediate leaseholder holds a secondary lease between the property owner and the end user, typically without owning or primarily using the property.
A secondary suite, also known as an accessory apartment, is a self-contained dwelling unit within or attached to a primary residential building, designed to house tenants or relatives while providing rental income to the homeowner.
A spreading agreement is a financial arrangement that extends collateral over multiple properties, often used to secure additional loans or consolidate existing loans.
Stabilized Value refers to the valuation of a property after it has achieved a consistent occupancy rate and stable operating expenses, reflecting its true income-generating potential under normal market conditions.
A stacking plan is an organized representation of tenants and their respective floor locations within a high-rise office building. It serves as a strategic planning tool for property managers and investors to optimize the use of vertical space.
Subdividing involves dividing a tract of land into smaller individual lots, which can then be sold separately or developed. The process of subdividing land typically involves planning, land surveying, zoning considerations, and obtaining the necessary permits.
Summary possession, often referred to as summary eviction, is a legal process by which a landlord can quickly evict a tenant for reasons such as non-payment of rent, violating lease terms, or other grounds stipulated by rental agreements or local laws. This process is typically expedited to address violations that need immediate resolution.
Surplus land is a portion of a parcel that exceeds the area required to support the current highest and best use of the property, but holds no separate value apart from the main parcel.
Surrender refers to the cancellation of a lease by mutual consent of the lessor and the lessee, where both parties agree to terminate the lease agreement before its stipulated end date.
Tenancy at sufferance occurs when a tenant who legally occupied a property remains in possession after the lease has expired, without the landlord's consent.
Tenant fixtures are installations or improvements made by a lessee that can be removed upon the expiration of the lease.
Tenant Improvements, often abbreviated as TIs, refer to the customized alterations a building owner makes to rental space as part of a lease agreement to configure the space for the tenant's specific needs.
Tenure refers to the nature of an occupant's ownership rights and indicates whether one is an owner or a tenant. It is a critical factor in real estate, providing insights into housing markets and property management.
Trade or business property, as referenced in Section 1231, refers to property used in a trade or business activity that can provide tax benefits upon sale or exchange. Such properties are subject to specific tax regulations that can impact depreciation and capital gains treatment.
A triple-net lease (NNN) is a commercial lease agreement where the tenant agrees to pay all expenses of the property, aside from the rent. These include real estate taxes, building insurance, and property maintenance.
A triplex is a type of residential building that contains three separate apartment or townhouse units within one structure. Each unit typically has its own entrance, and the building can offer different living spaces and layouts for tenants or owners.
A legal arrangement where property is transferred to a trustee, who manages it for the benefit of the beneficiary.
A trustee is an individual or organization that holds or manages property or assets for the benefit of another party. Trustees are often seen in trust deeds, and they have a fundamental role in ensuring the terms of the trust are adhered to, typically within a fiduciary or neutral capacity.
Turnover rate refers to the percentage of tenants, employees, or salespeople that leave a property, company, or organization within a specific time frame, typically within a year.
An unencumbered property is a real estate asset with a free and clear title, meaning there are no claims, liens, or restrictions by any third party. It signifies full ownership by the titleholder without any existing obligations such as mortgages, vendor liens, mechanic’s liens, or tax liens.
Vacancy and Collection Allowance is an estimated deduction from Potential Gross Income (PGI) when preparing a real estate budget. This deduction accounts for the loss of income from unrented units and uncollected rent.
The vacancy factor, also referred to as the vacancy rate, is a critical metric in real estate that measures the percentage of vacant rental properties compared to the total inventory of units in a specific area or property portfolio. It's essential for property managers, investors, and developers to assess the health of the rental market and forecast income expectations.
Vacancy rate represents the percentage of all available units or space that are vacant or not rented in a particular property, influencing projected income and financial planning.
A vacation home is a dwelling that the owner occasionally uses for recreational or resort purposes. The home may be rented out to others for a portion of the year. Income tax deductions related to vacation homes depend on the owner’s frequency of use.
Variable expenses are property operating costs that change in relation to the level of occupancy or usage of a rental property. These expenses are crucial in property management for adapting to fluctuating income levels.
A violation in real estate refers to an act or condition that is contrary to law or permissible use of real property. Examples include illegal business operations in residential zones and non-compliance with housing codes such as non-functioning plumbing in occupied apartment buildings.
WASTE refers to property abuse, destruction, or damage caused by a possessor that goes beyond normal wear and tear, affecting the rights and interests of other stakeholders in the property. This is often addressed in mortgage or lease contracts, as well as in life estates.
Wear and tear refers to the gradual deterioration of property as a result of regular use, weathering, and age. This inevitable process affects the condition and value of various property assets over time.
A white elephant in real estate is a property that is too expensive to maintain relative to its value or revenue-generating capability, often making it a financial burden instead of an asset.
