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Intermediate1.5 hours13 terms

Retirement Number Key Terms for Investors

This curated collection offers key terms that might be helpful when exploring how to calculate your personal retirement number. It's designed as a quick reference to understand commonly referenced concepts, not a comprehensive guide to retirement planning.

Term Collection

1

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
2

1031 Exchange

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.

Advanced15-18 min
3

Long-Term Hold Strategy

A real estate investment strategy focused on acquiring and holding properties for an extended period, typically five years or more, to generate wealth through rental income, property appreciation, and tax benefits.

Intermediate5-6 min
4

Self-Directed IRA

A Self-Directed IRA (SDIRA) is a specialized retirement account allowing investors to hold alternative assets like real estate, private equity, and precious metals, offering enhanced control but requiring strict adherence to complex IRS regulations to avoid prohibited transactions and Unrelated Business Income Tax (UBIT).

Advanced11-12 min
5

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
6

Operating Expenses

Operating expenses are the ongoing costs of running and maintaining a real estate investment property, excluding mortgage principal and interest payments, and capital expenditures.

Beginner13-14 min
7

Equity Build-up

Equity build-up refers to the increase in a property owner's stake or ownership percentage in a real estate asset over time. It primarily occurs through two mechanisms: principal paydown on a mortgage and property value appreciation.

Beginner2-3 min
8

Property Management

Property management is the professional oversight and operation of real estate, typically rental properties, on behalf of an owner, handling tasks from tenant acquisition to maintenance and financial reporting.

Beginner11-12 min
9

Leverage

Leverage in real estate is the use of borrowed capital, typically through mortgages, to finance property purchases and amplify potential investment returns.

Intermediate15-18 min
10

Real Estate Investment Trust

A Real Estate Investment Trust (REIT) is a company that owns, operates, or finances income-producing real estate, allowing individuals to invest in large-scale property portfolios through publicly traded shares.

Intermediate15-18 min
11

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
12

Inflation Hedge

An inflation hedge is an investment, such as real estate, that is expected to retain or increase its value and purchasing power during periods of rising inflation, protecting wealth from currency devaluation.

Intermediate13-14 min
13

Cash Flow

Cash flow in real estate investing represents the net income generated by a property after all operating expenses and debt service payments have been made. Positive cash flow indicates profitability, while negative cash flow suggests a loss.

Intermediate2-3 min

Common Questions