Different approaches to real estate investing including buy-and-hold, fix-and-flip, BRRRR, wholesaling, REITs, and syndications.
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Foundation terms you need to know first (153 terms)
Equity investment in real estate involves directly owning a portion or all of a property, providing the investor with an ownership stake and the potential to benefit from appreciation and rental income.
Real estate networking is the strategic process of building relationships with other professionals and investors in the real estate industry to share knowledge, find opportunities, and secure resources for investment success.
An absolute auction is a type of real estate auction where the property is sold to the highest bidder, regardless of the price, with no minimum bid or reserve price set by the seller.
An office building is a commercial property designed for businesses to conduct administrative, professional, or commercial operations, offering spaces for work and meetings.
A traditional bank mortgage is a conventional loan provided by a financial institution to purchase real estate, following guidelines from Fannie Mae and Freddie Mac, commonly used by investors to finance properties.
Complex strategies and professional concepts (156 terms)
Slow BRRRR is an advanced real estate investment strategy that extends the traditional BRRRR (Buy, Rehab, Rent, Refinance, Repeat) cycle over a longer period, often several years, to maximize equity appreciation and mitigate market risks.
An Equity-for-Property Swap is an advanced real estate investment strategy where an investor exchanges equity in one or more properties or entities for direct ownership of another property, often to achieve tax deferral, portfolio restructuring, or strategic asset acquisition.
Equity dilution occurs when a company or investment vehicle issues new shares, decreasing the ownership percentage of existing shareholders. In real estate, this often happens in syndications or partnerships when additional capital is raised.
Inverse condemnation is a legal action initiated by a private property owner against a government entity to recover "just compensation" for a taking of their property, where the government has not formally exercised its power of eminent domain but has effectively deprived the owner of beneficial use or value.
Capital stacking is an advanced real estate financing strategy involving the layering of multiple debt and equity instruments to fund a property acquisition or development, optimizing the capital structure for specific risk-return profiles.
Liability isolation is a legal strategy used by real estate investors to separate personal assets from investment liabilities, typically achieved through the formation of specific legal entities.
Liability protection encompasses legal and financial strategies used by real estate investors to safeguard personal assets from claims, lawsuits, or debts originating from their investment properties. It creates a crucial barrier between business risks and personal wealth.
Liability-Driven Investment (LDI) is an investment strategy primarily used by institutional investors, such as pension funds and insurance companies, to align their asset portfolios with their future liabilities. The core objective is to ensure sufficient assets are available to meet future obligations, typically by minimizing the sensitivity of the funding ratio to market fluctuations, especially interest rate changes.
A Life Estate is a form of property ownership where an individual (the life tenant) holds the right to possess and use a property for their lifetime, after which ownership automatically transfers to a designated third party (the remainderman).
A contract where an insurer pays a death benefit to beneficiaries upon the insured's death, in exchange for premiums. For real estate investors, it's a vital tool for risk management, wealth transfer, and leveraging cash value for investment opportunities.
Limited liability is a legal protection that shields an investor's personal assets from the debts and liabilities of their business, typically achieved by operating through a separate legal entity like an LLC or corporation.
A Limited Liability Company (LLC) is a business structure that protects its owners' personal assets from business debts and liabilities, while offering flexible taxation options.
A business entity composed of at least one general partner (GP) who manages the business and assumes unlimited liability, and at least one limited partner (LP) who contributes capital but has limited liability and no management authority.
A Line of Credit (LOC) is a flexible financing option that allows borrowers to draw funds as needed, up to a pre-approved limit, and only pay interest on the amount borrowed. It provides continuous access to capital, making it a versatile tool for real estate investors.
Liquidated damages are a pre-determined amount of money specified in a real estate contract, agreed upon by both parties, to be paid by the breaching party to the non-breaching party as compensation for anticipated losses in the event of a contract breach.
Liquidation preference is a contractual right granted to certain investors, typically preferred equity holders, that dictates the order and amount of payout they receive upon a liquidity event, such as a sale or refinancing, before common equity holders.
Liquidity in real estate refers to the ease and speed with which a property can be converted into cash at its fair market value. Real estate is typically considered an illiquid asset due to the time and costs involved in selling.
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