Starting out as a property investor in the real estate market can initially be very intimidating for beginners. There are numerous industry related investment terms and acronyms that every property owner will come across for the first time.
It is important to get acquainted with common real estate investing terms for investors to have a working knowledge of the basic real estate concepts. These terms will help in communicating effectively with other real estate professionals.
Let us look at some of the common real estate investment terms that every property owner should know:
- Appraisal: It is a survey conducted by the loan officer to determine the value of a property. The survey evaluates the property’s condition and compares listings to validate the purchase price before buying.
- Acquisition Cost: This is the final amount paid by the investor to purchase an investment property. It includes all the fees such as a mortgage, origination cost, closing costs, inspection fees, etc.
- Turnkey Property: An investment property that is fully renovated and does not require any repairs. The investor can purchase it immediately and rent out to tenants. It is updated according to current market standards.
- Rehabilitation: This term is used when repairs are required to make an investment property tenant-ready or ready for resale at a higher value. The repairs can range from minor repainting or installing upgraded fixtures to large-scale renovations such as replacing a roof or gutting a kitchen. The investor should be informed of these repairs prior to the purchase, and are typically listed in the inspection report.
- Assessment: It is an act of determining the real estate value of the property for tax purposes.
- Appreciation: Appreciation of a property stands for the increase in a property’s value over time. It can be attributed to improvement, increased demand, inflation, and/or weakening supply.
- Property Management: Rental property investors hire property managers to oversee the day-to-day operations of their rental property. Property management services include maintenance and repairs, rent collection, tenant screening, financial reporting, etc.
- Return On Investment (ROI): ROI is the measurement (calculated as a percentage) of the net profit of an investment property relative to the property’s total acquisition cost. A higher ROI will mean a higher yield for an investor.
The agents at Lone Star Realty & Property Management, Inc. assist property owners in understanding the terms related to investing in real estate. For more details on investment terms that every property owner should know, visit 1020 West Jasper Drive, Killeen, TX – 76542, or call at (254) 699 – 7003.