Contracts, regulations, compliance, entity structures, zoning, permits, and landlord-tenant law.
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Foundation terms you need to know first (89 terms)
Development costs are all the expenses incurred during the process of acquiring land, designing, constructing, and preparing a real estate project for use or sale, from start to finish.
Base rent is the fixed, minimum rent amount paid by a tenant to a landlord for the use of a property, excluding additional charges like operating expenses, taxes, or utilities.
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.
The Lease Commencement Date is the official date specified in a lease agreement when the tenant's rights and obligations, including rent payments and property responsibilities, legally begin.
An application fee is a non-refundable charge paid by a prospective tenant to a landlord or property manager to cover the costs associated with processing a rental application, including background and credit checks.
Complex strategies and professional concepts (117 terms)
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.
The accounting process of recognizing the estimated cost of an Asset Retirement Obligation (ARO) as a liability and capitalizing a corresponding asset, which is then depreciated over its useful life, reflecting the future costs associated with retiring a long-lived asset.
A legally binding contract that alters the priority of liens on a property, allowing a senior lienholder to voluntarily place their claim in a junior position to another, typically to facilitate new financing or complex transactions.
Unrelated Business Income Tax (UBIT) is a tax levied on the net income of a tax-exempt organization, including certain real estate investment vehicles, derived from a trade or business regularly carried on and not substantially related to its exempt purpose.
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.
An open listing is a non-exclusive real estate agreement where a seller can work with multiple real estate agents simultaneously, or sell the property themselves, with commission only paid to the agent who procures the buyer.
A legal document outlining the ownership, management, and operational procedures of a Limited Liability Company (LLC), crucial for defining member rights and protecting personal assets in real estate investments.
An Operating Company (OpCo) is a legal entity established by real estate investors to conduct the active, day-to-day management, leasing, and maintenance of properties, distinct from entities that merely hold asset ownership.
Opportunity Zone Investing is a tax-advantaged strategy allowing investors to defer, reduce, and potentially eliminate capital gains taxes by reinvesting eligible gains into Qualified Opportunity Funds (QOFs) that develop or operate businesses in designated low-income communities.
Opportunity Zones are a federal program offering tax incentives for investors who reinvest capital gains into designated economically distressed communities through Qualified Opportunity Funds (QOFs), aiming to spur economic development and job creation.
An option contract in real estate grants a buyer the exclusive right, but not the obligation, to purchase a property at a predetermined price within a specific period, in exchange for a non-refundable fee.
The Option Expiration Date is the final day on which a real estate option holder can exercise their right to purchase or lease a property under the agreed-upon terms.
The non-refundable fee paid by a potential buyer to a seller for the exclusive right to purchase a property at a predetermined price within a specified timeframe.
An Option to Purchase Land is a contractual agreement giving a buyer the exclusive right, but not the obligation, to buy a specific property at a predetermined price within a set period, in exchange for a non-refundable fee.
Other Comprehensive Income (OCI) recycling is an accounting mechanism where certain unrealized gains or losses initially recognized in OCI are subsequently reclassified into net income when specific conditions are met, primarily when the related asset or liability is realized or affects net income.
Out-of-state lending refers to securing financing for a real estate investment property located in a different state than the borrower's primary residence or the lender's main operational base. It enables investors to expand their portfolios beyond local markets.
A partial release is a clause in a mortgage or deed of trust that allows a borrower to obtain a release of a portion of the collateral from the lien, typically upon payment of a specified amount.
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