Different approaches to real estate investing including buy-and-hold, fix-and-flip, BRRRR, wholesaling, REITs, and syndications.
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Foundation terms you need to know first (153 terms)
Equity investment in real estate involves directly owning a portion or all of a property, providing the investor with an ownership stake and the potential to benefit from appreciation and rental income.
Real estate networking is the strategic process of building relationships with other professionals and investors in the real estate industry to share knowledge, find opportunities, and secure resources for investment success.
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.
An office building is a commercial property designed for businesses to conduct administrative, professional, or commercial operations, offering spaces for work and meetings.
A traditional bank mortgage is a conventional loan provided by a financial institution to purchase real estate, following guidelines from Fannie Mae and Freddie Mac, commonly used by investors to finance properties.
Complex strategies and professional concepts (144 terms)
Slow BRRRR is an advanced real estate investment strategy that extends the traditional BRRRR (Buy, Rehab, Rent, Refinance, Repeat) cycle over a longer period, often several years, to maximize equity appreciation and mitigate market risks.
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.
Equity dilution occurs when a company or investment vehicle issues new shares, decreasing the ownership percentage of existing shareholders. In real estate, this often happens in syndications or partnerships when additional capital is raised.
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.
Capital stacking is an advanced real estate financing strategy involving the layering of multiple debt and equity instruments to fund a property acquisition or development, optimizing the capital structure for specific risk-return profiles.
A 1031 Exchange allows real estate investors to defer capital gains and depreciation recapture taxes when selling an investment property by reinvesting the proceeds into a new "like-kind" investment property within strict IRS timelines.
Additional Paid-in Capital (APIC) represents the amount of capital investors contribute to a company or partnership that exceeds the par value of the issued stock or the stated capital contribution in a partnership agreement. It is a crucial component of equity, reflecting premium contributions.
Adjusted EBITDA is a financial metric that modifies a company's Earnings Before Interest, Taxes, Depreciation, and Amortization to exclude non-recurring, non-cash, or non-operating items, providing a clearer picture of core operational profitability, especially critical for real estate valuation and due diligence.
Adjusted Funds From Operations (AFFO) is a critical financial metric used primarily in real estate investment trusts (REITs) to measure the recurring cash flow available for distribution to shareholders, after accounting for non-cash items and recurring capital expenditures.
Alpha measures the excess return of an investment or portfolio relative to the return of a benchmark index, adjusted for risk, indicating the value added by active management.
Anchoring bias is a cognitive heuristic where an individual's decisions are overly influenced by an initial piece of information (the anchor), leading to skewed valuations, negotiations, and market analyses in real estate investment.
An Anti-Dilution Provision is a contractual clause, typically found in preferred stock agreements or limited partnership agreements, designed to protect early-stage investors from the dilution of their ownership percentage or investment value resulting from subsequent equity financing rounds at lower valuations.
Anti-dilution provisions are contractual clauses designed to protect investors' equity ownership percentage from being significantly reduced (diluted) by future equity issuances at a lower valuation, particularly in real estate syndications and private equity deals.
Asset correlation is a statistical measure quantifying how two assets' returns move in relation to each other, ranging from -1 (perfect negative) to +1 (perfect positive), crucial for real estate portfolio diversification and risk management.
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.
A Bank Statement Loan is a non-qualified mortgage (Non-QM) product designed for self-employed individuals and real estate investors who cannot easily document their income through traditional tax returns, instead relying on 12-24 months of business or personal bank statements for income verification.
Basis risk is the potential for financial loss due to imperfect correlation between a hedged asset and its hedging instrument, particularly significant in real estate where unique assets and illiquidity make perfect hedges rare.
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