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.
Basis risk is the potential for financial loss due to imperfect correlation between a hedged asset and its hedging instrument, particularly significant in real estate where unique assets and illiquidity make perfect hedges rare.
A bear market is a period of sustained price declines in a financial market, typically characterized by a 20% or more drop from recent highs, coupled with widespread pessimism and negative investor sentiment.
A market phenomenon where a declining real estate market appears to reverse and begin an upward trend, only to quickly resume its downward trajectory, trapping investors who bought into the false recovery. It often leads to significant losses for those who misinterpret the temporary rebound as a true market bottom.
A beginner investor is an individual new to real estate investing, typically with limited experience, focused on learning fundamental concepts and starting with lower-risk strategies.
Behavioral finance is an advanced field that combines psychology and economics to explain how cognitive biases, heuristics, and emotional factors lead to seemingly irrational decisions in financial markets, including real estate. It helps investors understand and mitigate the psychological influences that impact property valuations, market cycles, and investment strategies, moving beyond purely quantitative analysis.
Behavioral risk management in real estate involves identifying and mitigating the impact of psychological biases and irrational decision-making on investment outcomes, ensuring more disciplined and objective choices.
Beneficial ownership refers to the ultimate natural person(s) who directly or indirectly own or control a company or legal entity, even if legal title is held by another entity. It's crucial for transparency and anti-money laundering efforts in real estate.
The Benefit-Cost Ratio (BCR) is a financial metric used in real estate investment analysis to compare the present value of a project's benefits to the present value of its costs. It helps investors determine if a project's expected benefits outweigh its costs.
A Bermuda Mortgage Prepayment Option grants the borrower the right, but not the obligation, to prepay their mortgage principal on specific, predetermined dates throughout the loan's term, offering flexibility beyond a standard European option but less than an American option.
Bermuda option exercise dates refer to the specific, discrete intervals or predetermined points in time when the holder of a Bermuda option is permitted to exercise their right to buy or sell the underlying asset, falling between the continuous exercise of American options and the single exercise of European options.
The bid process in real estate is the structured procedure through which a prospective buyer submits a formal offer to purchase a property, and the seller evaluates and responds to that offer.
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