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.
The individual or entity legally designated to receive assets, such as real estate, from an estate, trust, or insurance policy upon the owner's death, ensuring a direct and often probate-free transfer.
A Private Equity Real Estate (PERE) fund is an investment vehicle that pools capital from institutional and accredited investors to acquire, develop, manage, and sell real estate assets, aiming for significant returns over a defined investment horizon.
A private lender is an individual or entity that provides capital for real estate investments outside of traditional financial institutions, offering flexible terms and faster funding for unique or time-sensitive deals.
Private Mortgage Insurance (PMI) is a type of insurance required by lenders for conventional loans when a borrower makes a down payment of less than 20%, protecting the lender in case of default.
A Private Placement Memorandum (PPM) is a legal document provided to prospective investors in a private securities offering, detailing the investment opportunity, management, terms, and all associated risks to ensure compliance with securities laws and facilitate informed decision-making.
A Private REIT is a real estate investment trust that is not publicly traded on stock exchanges, offering accredited investors direct access to diversified real estate portfolios with an illiquidity premium.
Probate is the legal process of proving a will's validity, settling a deceased person's estate, and distributing assets to heirs or beneficiaries under court supervision. It ensures proper asset transfer and debt settlement.
Prohibited transactions are IRS-forbidden dealings between a tax-advantaged retirement plan (like an SDIRA) and a "disqualified person," designed to prevent self-dealing and misuse of funds.
Project financing is a long-term, non-recourse or limited-recourse financing structure used to fund large-scale infrastructure, industrial, and real estate projects, where repayment is based solely on the project's future cash flows.
Project management in real estate investing is the systematic process of planning, executing, monitoring, controlling, and closing out a real estate project to achieve specific goals, maximize profitability, and mitigate risks.
A promissory note is a legally binding written promise by one party to pay a specific sum of money to another party on a specified date or on demand, outlining all loan terms.
A profit distribution mechanism in real estate syndications where the general partner receives a disproportionately higher share of profits after limited partners achieve specific return hurdles.
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