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 S Corporation is a federal tax designation for eligible domestic corporations that allows profits and losses to be passed directly to the owners' personal income without being subject to corporate tax rates, avoiding double taxation.
An S-Corp distribution refers to the disbursement of profits or assets from an S corporation to its shareholders, typically tax-free up to the shareholder's basis and the Accumulated Adjustments Account (AAA), with specific tax implications for real estate investors.
S-Corp distributions are payments of profits from an S corporation to its shareholders, which are generally tax-free up to the shareholder's adjusted basis in the company.
An S-Corporation election is a tax designation allowing a corporation or LLC to pass corporate income, losses, deductions, and credits through to its shareholders' personal income without being subject to corporate tax rates, thereby avoiding double taxation.
The SALT (State and Local Tax) deduction limit is a federal tax provision capping the amount of state and local taxes that can be deducted from federal taxable income at $10,000 per household, significantly impacting real estate investors in high-tax states.
An SBA Loan is a small business loan partially guaranteed by the U.S. Small Business Administration, primarily used for owner-occupied commercial real estate with favorable terms and lower down payments.
A geographical area managed by a local government entity responsible for public education, significantly impacting property values, rental demand, and investor decisions in real estate.
A Scope of Work (SOW) is a detailed document in real estate investing that outlines all tasks, materials, timelines, and quality standards for a property renovation or development project, serving as a blueprint for all stakeholders.
A seasoning period is a mandatory waiting time, typically 6-12 months, that a borrower must own a property before qualifying for a cash-out refinance or other equity-based loans, implemented by lenders to mitigate risk and verify property value.
An individual or entity designated to receive assets or benefits from an investment, trust, or insurance policy if the primary beneficiary is unable or unwilling to do so, ensuring continuity in wealth transfer.
Section 1250 property refers to depreciable real property, such as buildings and their structural components, subject to specific depreciation recapture rules upon sale, which can convert a portion of capital gains into ordinary income.
The Section 8 Housing Program, officially known as the Housing Choice Voucher Program, is a federal initiative that helps low-income families, the elderly, and people with disabilities afford safe, decent, and sanitary housing in the private market.
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