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Intermediate terms

REI Niche & Purpose: Key Terms Collection

This collection offers carefully selected key terms that might be helpful when exploring your real estate investment 'why' and defining your niche. It's designed to clarify commonly referenced concepts you'll encounter as you establish your investment purpose and focus. Use it as a quick reference to build a solid foundation for your investment journey.

Learning Path

1

Appreciation

Appreciation in real estate is the increase in a property's market value over time, leading to a profit for the owner when sold or refinanced. It is driven by market forces, economic growth, and property improvements.

Beginner12-13 min

2

Passive Income

Passive income refers to earnings from an enterprise in which an individual is not actively involved, typically generated from real estate investments like rental properties, REITs, or syndications, requiring minimal ongoing effort after initial setup.

Intermediate13-15 min

3

Real Estate Investment Strategy

A real estate investment strategy is a structured plan outlining an investor's approach to acquiring, managing, and disposing of properties to achieve specific financial objectives, considering risk tolerance and market conditions.

Intermediate11-12 min

4

Real Estate Niche

A real estate niche is a specific, focused segment of the property market that an investor chooses to specialize in, allowing them to develop expertise and gain a competitive advantage.

5

Net Operating Income

Net Operating Income (NOI) is a key real estate metric representing a property's annual income after deducting all operating expenses, but before accounting for debt service, income taxes, and capital expenditures.

Intermediate11-12 min

6

Capital Accumulation

Capital accumulation is the process of increasing one's wealth or assets over time by saving, investing, and reinvesting earnings to build a larger financial base.

Beginner5-6 min

7

BRRRR Method

The BRRRR Method is an advanced real estate investment strategy (Buy, Rehab, Rent, Refinance, Repeat) designed to build a scalable rental property portfolio by leveraging forced appreciation to recycle initial capital for subsequent investments.

Advanced14-15 min

8

Real Estate Exit Strategy

A real estate exit strategy is a predefined plan for how an investor will liquidate or conclude their involvement with a property, aiming to realize profits, recover capital, or mitigate losses.

Intermediate13-14 min

9

Value-Add Strategy

A real estate investment strategy focused on acquiring underperforming properties and increasing their value through renovations, operational improvements, or repositioning to boost Net Operating Income (NOI).

Intermediate15-18 min

10

Equity

Equity in real estate is the portion of a property's value that an owner truly owns, free and clear of any outstanding debts or liens. It is calculated as the property's current market value minus the total amount owed on any mortgages or loans.

Beginner12-13 min

11

Residential Real Estate

Residential real estate refers to properties used for housing, including single-family homes, multi-family units, condos, and townhouses. It's a popular investment for rental income and appreciation.

Beginner12-13 min

12

Return on Investment

Return on Investment (ROI) is a financial metric that measures the profitability of an investment by comparing the net profit to the initial cost, expressed as a percentage.

Beginner13-14 min

13

Commercial Real Estate

Commercial Real Estate (CRE) refers to properties used exclusively for business activities or to generate income, encompassing office, retail, industrial, and large multifamily assets.

Intermediate14-15 min

14

Financial Freedom

Financial freedom is the state where your passive income consistently covers all your living expenses, allowing you to live without needing a traditional job.

15

Risk Tolerance

Risk tolerance is an individual's psychological willingness and financial ability to take on risk in pursuit of investment returns, dictating comfortable levels of market fluctuation and potential loss.

Intermediate5 min

16

Investment Thesis

An investment thesis is a detailed, data-driven argument explaining the fundamental reasons for a specific real estate investment, including market rationale, strategy, financial projections, and risk management.

Intermediate5-6 min

17

Cash-on-Cash Return

Cash-on-Cash Return (CoC) is a real estate investment metric that calculates the annual pre-tax cash flow generated by a property as a percentage of the total cash an investor has invested.

Intermediate15-18 min

18

Core Market

A core market in real estate is a highly desirable, stable, and established geographic area known for consistent demand, strong property values, and low investment risk, driven by robust economies and high quality of life.

19

Rental Property

A rental property is real estate purchased with the intent to generate income through tenant rent payments and potential property value appreciation.

Beginner13-14 min

20

Fix-and-Flip

Fix-and-flip is a real estate investment strategy where an investor buys an undervalued property, renovates it to increase its value, and then sells it quickly for a profit.

Beginner11-12 min

21

Capitalization Rate

The Capitalization Rate (Cap Rate) is a real estate valuation metric used to estimate the potential rate of return on an investment property, calculated by dividing its Net Operating Income (NOI) by its current market value.

Intermediate14-15 min

22

Due Diligence

Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.

Intermediate14-15 min

23

Comparative Market Analysis

A Comparative Market Analysis (CMA) is an informal estimate of a property's value based on recently sold, active, and expired listings in the same area, used by real estate professionals to help buyers and sellers determine a competitive price.

Intermediate15-18 min