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Real Estate Investing > Real Estate Investing > Flashcards

Real Estate Investing Flashcards

1
Q

1031 Exchange

A

powerful tax-deferment strategy for real estate held as an investment. It allows an investor to sell a property without paying capital gains on the sale.

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2
Q

Adverse Possession

A

Adverse possession, or a “Squatters rights”, is a legal ruling that transfers property ownership based on continuous occupany over an extended period of time

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3
Q

After- Repair Value (ARV)

A

ARV is the potential sales price of a home or investment property as determined by the market.

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4
Q

Amenity

A

An amenity is a desirable or useful feature or facility within a property structure. Amenities are typically features that are highlighted and pitched to renters when they are looking to rent at a certain complex.

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5
Q

Amortization

A

Amortization is the gradual process of an outstanding loan balance dropping over time as the borrower makes monthly payments

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6
Q

Appraiser

A

An appraiser is a trained, licensed professional tasked with evaluating a property to estimate its current fair value in the marketplace

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7
Q

Appreciation

A

Appreciation is the rise in value of an asset over time, typically relating to the value of an entire asset class, such as real estate, stocks, bonds, and currencies

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8
Q

APR

A

The Annual Percentage Rate, or APR, is the yearly amount that must be paid by a borrower in order to maintain and to pay off a loan.

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9
Q

Broker

A

A broker is a middleman, or matchmaker, who connects a buyer and a seller. In real estate, a broker’s job is to match homebuyers and home sellers, while being paid a commission.

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10
Q

Capital Expenditure

A

Capital expenditures (CapEx) are investments in long-term, fixed assets—like a new roof or company equipment. Learn more at the BiggerPockets Glossary.

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11
Q

Capital Gains Tax

A

When you sell an asset for more than you paid for it, you trigger what is called a capital gains tax—but there are ways to avoid paying this pricey tax.

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12
Q

Capitalization Rate aka “Cap Rate”

A

The capitalization rate is the rate of return an investor can expect from their real estate properties, calculated by dividing the income by the market value.

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13
Q

Cash-Out Refinance

A

A cash-out refinance allows homeowners to take out a new mortgage and receive additional cash, which can be used for renovations or debt pay-off.

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14
Q

Closing Costs

A

Closing costs are payments by both buyers and sellers that occur during a real estate transaction, such as the sale or purchase of a house.

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15
Q

Comparative Market Analysis (CMA)

A

A comparative market analysis (CMA) looks at similar properties to help a real estate investor, seller, or buyer determine a home sale or offer price.

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16
Q

Consumer Price Index

A

The Consumer Price Index is a vital economic indicator that measures how much the cost of consumer goods and services increase over a year.

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17
Q

Debt - to - Income Ratio (DTI)

A

The debt-to-income ratio calculates the ratio of monthly debt to gross income. Lenders use this number to understand how much house a buyer can afford.

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18
Q

Deed

A

A deed is the document showing proof of ownership for land or property. Learn more about this essential element of the real estate buying and selling process.

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19
Q

Default

A

Default is the failure to repay a debt, such as a mortgage. This can lead to eviction and foreclosure and can dramatically affect a borrower’s credit.

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20
Q

Depreciation

A

Depreciation is how goods and assets lose value. But that’s not a bad thing—for savvy investors, it’s a tax strategy. Learn more about depreciation here.

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21
Q

Downturn

A

An economic downturn happens when a country’s gross domestic product turns stagnant or starts to fall due to decreased consumer confidence. It can lead to a recession.

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22
Q

Dual Agency

A

Dual agency is when a real estate agent represents both the buyers and the sellers in a transaction. It’s typically a bad idea—here’s why.

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23
Q

Earnest Money

A

When purchasing real estate, earnest money—or a good faith deposit—shows sellers you’re serious. Learn more about this step in the home-buying process here.

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24
Q

Egress

A

Egress is another word for “a way to get out.” When buying real estate or expanding a basement, you’ll want to follow local code. Here’s what you should know.

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25
Q

Eminent Domain

A

The Fifth Amendment grants the federal government the power of eminent domain, which allows it to take private property and convert it to public use.

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26
Q

Equity

A

Equity is the difference between the market value of a property and the amount of money that is still owed on the loan. A broad term, equity, at its essence, is about ownership.

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27
Q

Estate

A

A word with deep legal origins, “estate” has been consistently defined for centuries while adapting to the needs of the times. In essence, one’s estate is everything they own; it’s everything that belongs to a person.

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28
Q

Fair Housing Act

A

The Fair Housing Act prevents housing discrimination based on race, sex, religion, disability, and a number of other factors and identities. Learn more here.

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29
Q

Fair Market Value ( FMV )

A

Fair market value determines an asset’s value—like the appropriate purchase price for a house. Learn more about calculating fair market value here.

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30
Q

FHA Loan

A

FHA loans are mortgages insured by the Federal Housing Administration (FHA), meant to boost home ownership among low-to-moderate income individuals.

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31
Q

Fixed Rate Mortgage

A

A fixed-rate mortgage charges a set interest rate that doesn’t change during the term of the loan. Learn more about these mortgages here.

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32
Q

For Sale By Owner (FSBO)

A

For sale by owner (FSBO) is a real estate transaction where a property owner chooses not to hire a real estate agent and instead sells the property themselves.

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33
Q

Foreclosure

A

Foreclosure is a legal process whereby a lender takes ownership of a property from the borrower after the borrower fails to honor their commitment to pay off their loan.

34
Q

Fractional Ownership

A

Fractional ownership is when two or more investors purchase a property together. Start your real estate investing journey today with the BiggerPockets Glossary.

35
Q

Freddie Mac

A

Freddie Mac, like Fannie Mae, is a home mortgage company created by the U.S. Congress. It buys and guarantees mortgages through the secondary mortgage market.

36
Q

Gentrification

A

Gentrification is a process where a neighborhood undergoes urban development, involving an influx of higher-income residents to an otherwise abandoned or rundown area.

37
Q

Ground Lease

A

A ground lease gives tenants permission to develop a plot of land over the course of the lease. Start your real estate investing journey at BiggerPockets.

38
Q

Hard Money Loan

A

What is a hard money loan? We explain how this unique financing option can help your real estate investment strategy at the BiggerPockets Glossary.

39
Q

HELOC

A

A home equity line of credit (HELOC) is a home loan that uses the equity in your home as collateral. Here’s how they can help you achieve your investment goals.

40
Q

Home Inspection

A

A home inspection is an examination of a home—from the foundation to the roof and many things in between—that is meant to be objective.

41
Q

Home Warranty

A

A home warranty covers the repair and replacement of appliances and home systems, such as water heaters, plumbing, and HVAC.

42
Q

Housing Starts

A

Housing starts is the number of new residential construction projects that begin in a month. Learn more and start your real estate investment journey today.

43
Q

Inflation

A

Inflation is the steady increase in the average prices of goods and services over time. Inflation reduces a currency’s purchasing power.

44
Q

Ingress

A

Ingress provides legal access for a landlocked real estate owner through a private road or driveway. Learn more about ingress and land use agreements.

45
Q

Interest

A

Interest rates determine how much it costs to borrow money, like when buying a house, or how much return you’ll receive on an investment.

46
Q

Interstate

A

When someone dies intestate, it means that they passed without leaving a valid will. As a result, their estate goes into a process called intestate succession.

47
Q

Joint Tenancy

A

Joint tenancy is one type of property ownership, which gives two parties equal rights. Learn more about joint tenancy here.

48
Q

Jumbo Loan

A

A jumbo loan is a special mortgage that finances real estate that is too expensive for a conventional conforming loan. They are also called non-conforming loans.

49
Q

Landlord

A

A landlord is a person or organization that leases real estate they own to another individual or organization in exchange for rent. Learn more about landlords here.

50
Q

Lease

A

A lease is a legal agreement between a landlord and a renter allowing the renter to use a property for a specific period of time in exchange for rent payments.

51
Q

Lender

A

Lenders are people or companies that allow you to borrow money with the promise that it will be repaid. Repayment includes principal and interest, and may include monthly payments or a lump sum payment.

52
Q

Leverage

A

Real estate leverage is when you use debt to buy investment properties, expand your potential return on investment and increase your net worth.

53
Q

Lien

A

A lien is a financial claim on a property that gives creditors legal rights — such as allowing a bank to foreclose on or sell a house.

54
Q

Mortgage

A

mortgage is a loan used to buy a house or other real estate. In other words, it’s a fancy term for “home loan.”

55
Q

Mortgage Broker

A

A mortgage broker serves as a middleman between homebuyers and lenders. They can shop different lenders to find borrowers the best rate and loan terms.

56
Q

Net Worth

A

Net worth, also known as personal capital, is like your personal balance sheet. It’s all the assets you own less the debts you owe—acting as a snapshot of your personal wealth

57
Q

Note

A

A note creates a financial obligation between a creditor and an investor, typically in the form of a loan. Learn about smart note investment strategies here.

58
Q

Offer

A

An offer is a proposal to buy or sell property for a set price, most commonly used during the home-buying process. Learn more about how offers work here.

59
Q

PITI

A

PITI refers to essential elements of your mortgage payment: principal, interest, taxes, and insurance.

60
Q

Pre-Approval Letter

A

A pre-approval letter includes documentation stating exactly how much mortgage a homebuyer has been conditionally approved to borrow.

61
Q

Private Mortgage Insurance

A

Private mortgage insurance (PMI) is a type of mortgage insurance that is required if you purchase a property with less than 20% down.

62
Q

Probate

A

Probate is a court procedure that administers a deceased person’s will. Real estate investors can search probate property to find below-market deals.

63
Q

Quitclaim Deed

A

A quitclaim deed is a quick way to transfer property to a new owner. Many times, these transfers don’t involve

64
Q

Refinance Rate

A

The refinance rate is the APR for a mortgage refinance, such as a cash-out refinance. You can save money if it’s better than your current rate.

65
Q

Rent to Own Homes (RTO)

A

Rent-to-own homes allow renters to buy the property they live in at a later date. Before the purchase, they make regular payments and manage home maintenance.

66
Q

Return On Investment (ROI)

A

Return on investment, or ROI, measures how much net profit is made on an investment, displayed as a percentage of the cost of that investment.

67
Q

Reverse Mortgage

A

A reverse mortgage helps homeowners convert equity into income.

68
Q

Security Deposit

A

Landlords require a security deposit before move-in to act as a guarantee against property damages—but most security deposits are refundable.

69
Q

Short Sale

A

A short sale is the sale of a property currently underwater on its mortgage, and typically is initiated as an alternative to foreclosure.

70
Q

Squatter

A

A squatter occupies real estate without having a proper legal claim. Most of the time, squatters can’t be removed—they must instead be evicted.

71
Q

Sublease

A

A sublease is when a tenant rents a property to another tenant. In most cities, real estate investors can decide whether they want to permit subletting.

72
Q

Syndicate

A

Syndicates are partnerships between people or companies to handle large transactions — like real estate purchases.

73
Q

Tenants By Entirety (TBE)

A

Tenants by entirety is an important concept to understand if you plan to buy real estate—regardless of whether you’re an investor or first-time buyer.

74
Q

Timeshare

A

A timeshare is an agreement in which many individuals share the costs of a property.

75
Q

Title

A

A title defines who owns a real estate property

76
Q

Title Insurance

A

Title insurance protects either a lender or a homebuyer from claims against a home’s title, such as liens or encumbrances

77
Q

Under Contract

A

If a home is listed as “under contract,” that means the owners have accepted an offer.

78
Q

Underwriter

A

A mortgage underwriter decides whether your mortgage loan application gets approved, suspended or denied.

79
Q

Unsecured Loan

A

An unsecured loan is a loan that does not require collateral, such as real estate. These loans typically have higher interest rates and shorter repayment terms.

80
Q

Warranty Deed

A

An unsecured loan is a loan that does not require collateral, such as real estate. These loans typically have higher interest rates and shorter repayment terms.

Real Estate Investing (1 decks)

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