Adjusted Gross Income

Adjusted Gross Income (AGI) is a term that is often used in tax accounting and personal finance, but it can have relevance in the real estate investment industry as well. In the context of taxation, the AGI refers to an individual's total gross income minus certain deductions. It's calculated before... Read more

After-Tax Cash Flow

After-Tax Cash Flow in the context of the real estate investment industry refers to the amount of net income an investor earns from an investment property after all operating expenses and taxes have been paid. This figure is significant because it provides a clear picture of the investment’s profitability after... Read more

Alternative Investment

An alternative investment is a type of investment that falls outside the conventional categories of cash, bonds, or stocks. These are typically used as a means to diversify an investment portfolio and can include assets such as: Real Estate: This can refer to investments in residential, commercial, or industrial properties.... Read more

Amortization

Amortization refers to the process of spreading out a loan into a series of fixed payments over time. When it comes to real estate, this typically means a mortgage loan on a property. The payments are divided into two parts: the principal, which is the original amount borrowed, and the... Read more

Anchor Tenant

In the real estate investment industry, an anchor tenant is typically a large, well-known business that serves as the main draw to a commercial property, particularly in shopping malls or shopping centers. This tenant often occupies a large space and attracts significant customer traffic. Anchor tenants are considered critical to... Read more

Annual Percent Yield

Annual Percent Yield (APY) is a financial concept that's used broadly in the financial industry, and it can apply to various sectors including real estate investment where the tenants in common (TIC) structure is used. APY is a measure of how much you can earn or pay in interest on... Read more

Appraisal

Appraisal refers to the formal and systematic process of estimating the value of a property, typically performed by a licensed and certified professional known as an appraiser. The objective of an appraisal is to determine a property's market value or the most probable price that the property would sell for... Read more

Appraised Value

Appraised value holds significant importance in real estate. The appraised value is essentially the estimated market value of a property as determined by a professional, licensed appraiser. This value is established after a thorough examination of various factors related to the property, such as its physical condition, location, size, amenities,... Read more

Appreciated Property

Appreciated property refers to a property that has increased in value over time. This increase could be due to a variety of factors, such as improvements made to the property, a general rise in market prices, or increased demand in the area. For example, if an investor purchases a building... Read more

Appreciation

In the real estate investment industry, appreciation refers to the increase in the value of a property over time. This can occur for a variety of reasons, such as general inflation, increased demand, improvements to the property, or changes to the area around the property that make it more desirable.... Read more

Assessed Value

Assessed Value refers to the dollar value assigned to a property by a public tax assessor for the purposes of taxation. This value is used to determine the property taxes that the owner must pay annually. The assessed value is typically a percentage of the property's current market value, which... Read more

Assessor

An assessor is a professional who determines the value of a property. The main function of an assessor is to carry out a property appraisal, a process that involves estimating the market value of real estate properties for various purposes such as taxation, sale, development, insurance, and investment. Assessors consider... Read more

Assignment

Assignment typically refers to the act of transferring one's ownership interest in a property to another party. A TIC agreement usually involves multiple parties, each of whom owns an undivided share of the entire property, with the right to use and benefit from all parts of it. When a tenant... Read more

Beneficiary

The term beneficiary refers to the individual or entity designated by the account or property holder to receive the assets upon the death of the owner. The role of a beneficiary is crucial in estate planning and asset management, as it ensures the transfer of assets is executed according to... Read more

Broker

A broker is a professional who acts as an intermediary between buyers and sellers of real estate. The broker's primary job is to facilitate a transaction between these parties. There are several types of real estate brokers, each with different responsibilities: Listing Broker: Also known as a seller's broker, they... Read more

Capital Gain

Capital gain, within the context of the real estate investment industry, refers to the increase in the value of a real estate property or investment over time. This increase in value, when the property is sold, results in a profit for the investor, which is known as a capital gain.... Read more

Capital Gain or Loss

Capital gain or loss in the real estate investment industry refers to the difference in the purchase price and the selling price of real property. A capital gain occurs when you sell a real estate property for more than you purchased it. The gain is the amount by which the... Read more

Capital Gain Tax

Capital Gain Tax in the context of the real estate investment industry refers to a type of tax that is levied on the profit (the capital gain) realized from the sale of a real estate property or investment. The tax is only applied when the property is sold, and not... Read more

Capital Gains

Capital gains refer to the increase in value of a real estate property over the period of ownership. When the property is sold, the difference between the purchase price (adjusted for improvements, if any) and the selling price is considered the capital gain. For instance, if an investor purchases a... Read more

Capital Losses

Capital losses refer to the decrease in the value of a property or an investment below its purchase price. A capital loss occurs when a property is sold for less than the original purchase price, not including any improvements made or expenses incurred while owning the property. This loss is... Read more

Closing

In the real estate investment industry, "closing" refers to the final steps in a property transaction where the title of the property is transferred from the seller to the buyer. It's the culmination of the real estate transaction process and typically involves several key components. Here are the key components... Read more

Closing Costs

Closing costs refer to the fees and expenses incurred during the transfer of property ownership from a seller to a buyer. They are paid at the closing of the real estate transaction. However, they are specifically significant in a 1031 exchange because only certain types of closing costs can be... Read more

Co-Tenancy

Co-tenancy, as part of Tenants in Common (TIC), refers to a legal arrangement where two or more parties share ownership rights in a single property. This form of ownership allows each tenant in common to have an undivided interest in the property, meaning that each owner has the right to... Read more

Co-Tenant

A co-tenant is a person who shares an interest in the same property with one or more other people. This term is often used in the real estate industry and in legal contexts. Co-tenancy is one form of concurrent ownership, which is when two or more people own an interest... Read more

Commission

A commission is a fee or payment made to a real estate agent or broker for services provided in facilitating a real estate transaction. It is usually a percentage of the property's sale price and is generally split between the selling and listing agents if they are different. The standard... Read more

Common Area

A common area is a portion of a property that is available for use by all tenants, occupants, or owners. Common areas serve the collective interests and needs of the individuals using the building or community, rather than any single private owner or tenant. For instance, in a residential apartment... Read more

Deed

A deed is a legal document that signifies ownership of a property. The deed includes information about the seller (grantor) and buyer (grantee), as well as a detailed description of the property. When the property is sold, the seller signs the deed over to the buyer. There are different types... Read more

Devisee

In the realm of real estate investments, particularly when dealing with Tenants in Common (TIC) arrangements, the term devisee holds significant importance. A devisee is a person or entity that is specifically named in a will to inherit real estate property. This term is most commonly used in the context... Read more

Due Diligence

Due diligence in the 1031 exchange industry involves a careful and thorough examination of all aspects of a potential real estate transaction to ensure its compliance with the requirements of a Section 1031 exchange and other related laws, as well as its suitability for the investor's objectives. The due diligence... Read more

Easement

An easement refers to a legal right to use another person's land for a specific purpose. It is a form of non-possessory interest that allows the holder of the easement to use property that he or she does not own or possess. Easements often involve a portion of a property... Read more

Encumbrance

Encumbrance refers to any legal claim or liability that is attached to a property. It can limit the owner's ability to use the property or transfer ownership until the encumbrance is lifted. Types of encumbrances can include: Mortgages: This is the most common type of encumbrance, where a property serves... Read more

Equity

Equity in the context of the 1031 exchange industry refers to the value that an investor has in a real estate property. In a 1031 exchange, this is essentially the net value of the property being "exchanged" or sold, once any liabilities such as a mortgage are subtracted. Let's say... Read more

Escrow

Escrow is a legal concept in which a financial instrument or an asset is held by a third party on behalf of two other parties that are in the process of completing a transaction. The escrow agent has the duty to properly execute the obligations under an escrow agreement. When... Read more

Eviction

Eviction is a legal process that a property owner or manager initiates to remove a tenant from a rental property. This process is typically initiated due to a violation of the terms of the lease or rental agreement, such as failure to pay rent, damage to the property, or other... Read more

Executor

Understanding how an executor operates can be quite relevant in real estate investing, as they can potentially control the sale or distribution of real property after someone's death. An executor, more generally, is a person or institution appointed by a testator (the person who makes a will) to carry out... Read more

Force Majeure

Force Majeure is a clause that is typically included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations. It essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control... Read more

Foreclosure

Foreclosure refers to the legal process by which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments. This process is conducted by forcing the sale of the asset used as the collateral for the loan, which is typically a property. When... Read more

Guarantor

A guarantor is an individual or entity that ensures or guarantees the loan obligations of another individual or entity, typically the borrower. A guarantor steps in and becomes legally responsible for paying the debt or the mortgage payments if the borrower defaults on their loan or fails to meet their... Read more

Heir

An heir is a person who is legally entitled to inherit the assets or property of another individual upon their death. This is often due to familial relations or specified in a legal document like a will. In terms of real estate, an heir may inherit properties, real estate holdings,... Read more

Holdover Tenant

A Holdover Tenant refers to a tenant who continues to occupy a property after their lease has expired but without the landlord's explicit permission to do so. In general, holdover tenants can be problematic for real estate investors and landlords. Their continued occupancy can prevent new tenants from moving in... Read more

Homeowner’s Association (HOA)

A Homeowners' Association (HOA) is an organization in a subdivision, planned community, or condominium that makes and enforces rules for the properties and their residents. An HOA can play a significant role in preserving property values and ensuring a harmonious living environment, which can, in turn, attract potential tenants or... Read more

Intestate

Intestate refers to dying without having made a valid will or other binding declaration. When someone dies intestate, it means that they have not left instructions regarding the distribution of their assets, including real estate holdings. In this situation, the distribution of the deceased's estate is governed by the intestacy... Read more

Joint Tenancy

Joint Tenancy is a legal term used in the real estate investment industry to describe a specific form of ownership by two or more parties. It has certain characteristics that distinguish it from other types of co-ownership, such as tenancy in common. Here's a more detailed definition: Equal Ownership: In... Read more

Jointly And Severally

Jointly and severally is a legal term that is used to describe a situation where two or more parties are responsible together and individually for a particular obligation or liability. In the context of tenants in common, it doesn't typically apply directly, but I will explain how it might relate.... Read more

Landlord

A landlord refers to an individual, business, or entity that owns property and leases it to another party, known as a tenant, for a specified period of time. The property can be residential, commercial, or industrial, and the lease agreement outlines the terms and conditions under which the tenant may... Read more

Landlord’s Lien

A Landlord's Lien is a legal concept within the real estate industry that refers to a security interest or legal right that a landlord has over the tenant's personal property. This lien can be used to secure the payment of rent or other obligations that the tenant may have under... Read more

Late Fee

A Late Fee refers to a charge that is added to a regular payment when it is not paid on time. Late fees are typically stipulated in a lease or mortgage agreement and serve as a financial penalty for failing to pay rent or mortgage payments by the specified due... Read more

Lease

A lease refers to a contractual arrangement between two parties: the lessor (owner or landlord) and the lessee (tenant). The lease agreement stipulates the terms and conditions under which the property (which can be residential, commercial, or industrial) is rented by the lessee. Here's a more detailed explanation of the... Read more

Lease Option

A lease option is a contract that allows a tenant the right to purchase a property during or at the end of a rental period. It's a common real estate investment strategy that combines elements of a traditional lease with the option to buy the property. Here's how it works:... Read more

Lease Purchase

A Lease Purchase is a financial arrangement that combines elements of a traditional lease with the option of purchasing the property at the end of the lease term or during a specified period within the lease term. Typically, the tenant (or lessee) agrees to lease the property for a certain... Read more

Lease Renewal

A Lease Renewal refers to the process of extending the term of a lease agreement between the landlord (which could be a real estate investor or property management company) and the tenant. This typically involves a review of the terms and conditions under which the property was originally leased and... Read more

Leasehold

Leasehold refers to a property tenure where a person, the leaseholder or lessee, is given the right to occupy and use a property for a set period of time. This is accomplished through a lease agreement with the property's freeholder (or landlord), who retains the ownership of the land itself.... Read more

Lien

A lien refers to a legal claim or right that a lender or creditor has over a property until a debt that the property owner owes is paid off. When a property owner takes out a loan or borrows money, the lender might put a lien on the property as... Read more

Market Value

Market Value refers to the most probable price that a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably and assuming the price is not affected by undue stimulus. It represents an unbiased... Read more

Mortgage

A mortgage refers to a legal agreement by which a financial institution, such as a bank or mortgage lender, lends money to a borrower at interest. In exchange, the lender takes the title of the borrower's property as collateral until the mortgage is paid off in full. Loan Agreement: The... Read more

Multiple Listing Service (MLS)

Multiple Listing Service (MLS) is a critical tool within the real estate investment industry, primarily used in the United States and Canada. It's a service that gathers, compiles, and disseminates information about real estate properties that are up for sale or rent. Database System: MLS is essentially a database system... Read more

Non-Accredited Investor

In the realm of real estate investment, the term non-accredited investor refers to an individual who does not meet the specific financial criteria established by the Securities and Exchange Commission (SEC) for accredited investor status. The distinction between accredited and non-accredited investors is significant because it determines the types of... Read more

Notice To Quit

In the real estate investment industry and landlord-tenant relationships, a Notice to Quit is a formal written notice given by a landlord to a tenant indicating that the tenant must vacate the rented premises within a specified period of time. This notice can be issued for various reasons, including: Non-payment... Read more

Option Fee

An Option Fee is a sum of money paid by a potential buyer to a seller for the exclusive right to purchase a property at a later date. This fee gives the buyer the "option" to buy the property under specific terms within a specified time frame, but it doesn't... Read more

Partition

A partition refers to the division of co-owned property. When multiple people own property as tenants in common (TIC), each has an undivided interest in the whole property. Over time, one or more co-owners may wish to separate their share from the collective ownership, often because they wish to sell,... Read more

Power Of Attorney

A Power of Attorney (POA) refers to a legal document that grants one person (known as the "agent" or "attorney-in-fact") the authority to act on behalf of another person (known as the "principal") in specific real estate matters. This delegated authority can range from managing, selling, or purchasing property to... Read more

Probate

Probate is a legal concept that can relate to how property owned as tenants in common is transferred after an owner's death. Probate refers to the legal process by which a deceased person's estate is administered and distributed to heirs and beneficiaries. During this process, a court reviews the validity... Read more

Purchase Price

In the realm of real estate investments, particularly when dealing with 1031 exchanges, the term "Purchase Price" carries significant weight and is central to the entire transaction process. The Purchase Price refers to the total monetary amount that a buyer agrees to pay to acquire a property from the seller.... Read more

Quiet Enjoyment

Quiet Enjoyment is a legal concept primarily involved in real estate and property law, which is also crucial in the real estate investment industry. When a tenant signs a lease, there is usually a quiet enjoyment clause included. This clause ensures that the tenant can peacefully occupy and enjoy the... Read more

Quitclaim Deed

A Quitclaim Deed is a legal instrument used in the real estate industry that transfers whatever interest the grantor (the person selling or transferring the property) may have in a specific piece of property without making any warranties or representations about the property's title. This means that the grantor doesn't... Read more

Real Estate Agent

A real estate agent is a licensed professional who represents buyers, sellers, or both in real estate transactions. Within the context of the real estate investment industry, their role often involves: Property Identification: Helping investors identify potential properties that meet their investment criteria, whether they're looking for residential rental properties,... Read more

Rent

Rent in the real estate investment industry is essential, acting as a pivotal source of income and value determination for investors and landlords. Investors primarily purchase properties with the expectation of leasing them out to tenants, ensuring a continuous flow of income. This regular cash flow is instrumental in calculating... Read more

Rent Control

Rent control is a government program that places a limit on the amount that a landlord can charge for leasing a home or renewing a lease. Rent control laws are designed to help keep rental housing affordable, protecting tenants from steep rent increases and ensuring that they have stable housing.... Read more

Rent Stabilization

Rent stabilization is a type of rent regulation. Under rent stabilization laws, landlords are limited in how much they can increase rent for existing tenants in certain residential properties. Rent stabilization laws also often provide tenants with additional protections, such as the right to renew their lease. Rent stabilization is... Read more

Rental Agreement

A Rental Agreement is a binding legal contract between a property owner or manager (often referred to as the "landlord" or "lessor") and an individual or entity (referred to as the "tenant" or "lessee") who wishes to rent or lease a property for a specified period of time. This document... Read more

Return On Investment (ROI)

Return on Investment (ROI) is a key performance metric commonly used in various industries, including real estate investment, to evaluate the profitability and efficiency of an investment. In the context of the real estate investment industry, ROI is used to analyze the return or profit made from an investment in... Read more

Right Of Entry

Right of Entry refers to a legal right or permission that allows an individual or entity to enter and access a particular property or land. This right can be granted through various means such as a lease agreement, easement, or license, and it often relates to various purposes such as... Read more

Right Of Survivorship

Right of Survivorship is a legal concept widely used in the real estate investment industry, primarily in joint ownership or tenancy situations. When two or more individuals jointly own a property with the Right of Survivorship, it means that if one owner dies, their ownership interest in the property will... Read more

Risk Management

Risk management is the systematic process of identifying, evaluating, prioritizing, and addressing potential financial, operational, and external threats associated with real estate investments. The primary objective is to protect the investor's capital, achieve expected returns, and ensure the sustainability of the investment over time. Key components of risk management in... Read more

Security Deposit

Security Deposit is defined as a sum of money paid by a tenant to a landlord before occupying a rental property. This deposit acts as a form of financial protection for the landlord, ensuring that potential damages or unpaid rents that might occur during the tenancy can be covered. Typically, the... Read more

Sublease

A sublease is a lease agreement in which the current tenant leases all or part of a rental property to another party, known as the subtenant or sublessee. This often occurs when the initial tenant needs to vacate the property temporarily or permanently before the lease term expires and doesn’t... Read more

Tenancy At Will

Tenancy At Will is a type of tenancy agreement that can be especially pertinent for landlords and investors. This is a leasehold estate that either the landlord or the tenant can terminate at any time upon providing reasonable notice. No formal agreement exists stating the duration of the tenancy, and... Read more

Tenancy By The Entirety

Tenancy by the Entirety (TBE) is a form of real estate ownership that is available only to married couples, and in some jurisdictions, to couples in a civil union or domestic partnership. It is commonly used in the real estate investment industry, as well as in personal home ownership, to... Read more

Tenancy For Years

Tenancy for Years is a legal term related to real estate, specifically in the context of leasing or rental agreements. A tenancy for years refers to a leasehold estate that lasts for a definite, fixed period of time. This duration is explicitly stated in the lease agreement, and it can... Read more

Tenancy In Common

Tenancy in Common (TIC) is a form of ownership in the real estate investment industry where multiple parties can hold an interest in a single property. Each tenant or owner has an undivided, separate interest in the property, and each owner holds a deed for their respective interest. Here are... Read more

Tenant

In the real estate investment industry, a tenant holds significant importance as an occupier of the property, facilitating various aspects of investment outcomes. Tenants occupy and utilize spaces such as residential, commercial, or industrial properties based on the terms laid out in a lease or rental agreement with the landlord... Read more

Tenant Improvement

Tenant Improvement (often abbreviated as TI) refers to the customized alterations a building owner makes to rental space as part of a lease agreement, to configure the space for the needs of that specific tenant. These improvements can include changes like new flooring, wall partitions, air conditioning systems, restrooms, or... Read more

Tenants In Common

Tenants in Common (TIC) is a term specifically used within the real estate investment industry to refer to a specific form of co-ownership or joint ownership of real estate property. In a TIC arrangement, multiple parties can own a fractional interest in the same property, and each owner has an... Read more

TIC Account

A TIC account generally refers to the ownership records, account information, and investment details connected to a tenant-in-common, or TIC, real estate investment. In a TIC structure, multiple investors each own a fractional interest in the same property rather than owning shares in an entity. This gives each investor a... Read more

Title

A title refers to legal ownership or the right to possess and use a property. It’s an essential concept in the real estate investment industry because it represents a person’s or entity’s legal right to own, use, and dispose of the property. Here’s a breakdown of what title means in... Read more

Title Insurance

Title insurance is a specialized type of insurance that plays a critical role in the real estate investment industry. When a person invests in real estate, they essentially purchase the legal ownership, or "title," of a property. Title insurance is meant to protect the investor (or homeowner) and mortgage lender... Read more

Title Search

Title Search refers to the thorough examination of public records to confirm a property's legal ownership and find out if any claims, defects, liens, or encumbrances affect the title. The primary purpose of a title search is to ensure that the seller has the right to sell the property and... Read more

Trustee

In the realm of real estate investments, particularly involving Tenancy in Common (TIC) and Delaware Statutory Trust (DST) structures, as well as 1031 exchanges, the term trustee carries significant responsibilities. The trustee is typically an individual, a corporate entity, or a professional trust company entrusted with holding the legal title... Read more

Undivided Interest

In real estate, an undivided interest refers to a situation where two or more individuals share ownership of a single piece of property. This concept is commonly associated with a form of co-ownership known as tenants in common. When individuals own property as tenants in common, each has an undivided... Read more

Unity Of Possession

In the context of property law, Unity of Possession is one of the traditional four unities required to establish a joint tenancy, alongside unity of interest, unity of title, and unity of time. However, it is also applicable to a tenancy in common. For tenants in common, Unity of Possession... Read more

Warranty Deed

In real estate, specifically within the Tenants in Common (TIC) investments, a Warranty Deed is a legal document that is used to transfer ownership of property. This type of deed provides the grantee (the person receiving the property) with certain guarantees from the grantor (the person transferring the property). Here... Read more

Tenants In Common Glossary