Property pays for all utilities.

Seller bought the property and received tax credits and now there is a limit on the amount of $ a tenant can make. You will have a harder time selling this type of property.

Number of years it will take you to repay the loan. Typically 20-30 years.

Manages the property management company. Fee is typically 1.5-2% to the asset manager.

Process whereby a seller down-selects buyers to a smaller group and asks them to submit their best and final offer.

A broker representing the buyer.

Costs can be capitalized over x# of years for tax purposes. Example: replace an AC unit.

A capitalization rate (cap rate) is a percentage that represents the potential rate of return on a real estate investment property. It's calculated by dividing the property's net operating income (NOI) by its market value. Essentially, it shows how much income a property generates relative to its price.

Inspecting the property’s exterior and interior to determine the condition and deferred maintenance (required maintenance that the current seller has not performed); also includes lease audit.

Required maintenance that has not been performed.

Disposing or selling of a property.

This is the % that is not being collected against the market rents. Includes vacancy, bad debt/non-payment, actual rents vs. market rents.

Signs on the loan, but no equity

Money that the seller keeps if you walk away from a deal. Hard money can be at time of contract, after due diligence, or any other time agreed upon.

Sponsoring a deal with one or more other people.

Signs on the loan & equity

The broker that has the property listed.

Non-binding offer to purchase – 1 or 2 pages with key terms.

Net operating income (NOI) is a financial metric that represents the profitability of an income-generating property or business before accounting for interest, taxes, depreciation, and amortization (or capital expenditures). In essence, it reflects the revenue generated from core operations after deducting all operating expenses.

Most deals are created with a LLC governing how the LLC’s business will be operated.

Broker document describing the property.

Has your assets and liabilities; net worth.

Private offering used to raise money from investors.

Industry term referring to financially analyzing investment real estate.

Contract between the buyer and seller.

• Recourse – personally liable

• Non-Recourse – not personally liable

After due diligence, the buyer goes back to the seller asking for items to be fixed and/ or a credit to fix deferred maintenance items.

Cap rate you think at time of sale for the property.

Lists all tenants; their lease amount and lease start/end date.

Billing back the tenants for utilities.

Application by an investor to join a limited partnership (LLC) for real estate investing

Sponsor raises funds from a group of people.

Real estate investing can have some huge tax advantages that create “tax-advantaged income”. Through the use of depreciation, 1031 exchanges, and self-directed IRAs, you can have some of the most favorable income tax treatments of any asset class.

Funds used for future capital items (rule of thumb= 1 month of rents).

A prepayment penalty that, in the event the borrower pays off a loan before maturity, allows the lender to attain the same yield as if the borrower had made all scheduled mortgage payments until maturity.