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.
A tax lien auction is a public sale where investors can purchase property tax liens from local governments, earning high-yield interest on delinquent property taxes until the property owner pays the debt or the investor can initiate foreclosure proceedings.
Tax planning in real estate involves strategically optimizing an investor's tax liabilities through proactive financial and legal decisions, leveraging deductions, credits, and deferral strategies to maximize after-tax returns and ensure compliance.
Tax reporting for real estate investors involves accurately documenting all income, expenses, and capital events related to investment properties to comply with IRS regulations and optimize tax liabilities.
A taxable event is any transaction or occurrence that results in a tax liability, requiring an individual or entity to pay taxes to a government authority. In real estate, these often involve the sale of property, depreciation recapture, or certain refinancing scenarios.
Taxable income is the portion of an individual's or entity's gross income that is subject to taxation after all allowable deductions, exemptions, and credits have been applied. For real estate investors, it determines the actual income on which taxes are paid.
Tenancy in Common (TIC) is a form of co-ownership where two or more individuals hold distinct, undivided interests in a property, allowing for unequal ownership shares and independent transferability of each owner's portion.
A tenant is an individual or entity who occupies real property owned by another, typically a landlord, under a lease agreement in exchange for rent payments.
A tenant credit check is a vital part of the tenant screening process, providing landlords with a detailed report of a prospective renter's financial history to assess their reliability and ability to pay rent.
Tenant default occurs when a tenant fails to uphold the terms of their lease agreement, such as non-payment of rent, property damage, or other lease violations, requiring landlords to follow specific legal procedures to resolve the breach.
Tenant Improvement (TI) refers to modifications made to a commercial space to customize it for a tenant's specific needs, often funded in part by a Tenant Improvement Allowance (TIA) from the landlord.
A tenant ledger is a comprehensive financial record detailing all monetary transactions between a landlord and a specific tenant, tracking charges and payments chronologically.
Tenant non-payment occurs when a tenant fails to pay rent or other agreed-upon charges by the due date, violating the terms of their lease agreement.
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