Real Estate Glossary
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Common Real Estate Terms and Definitions
Commercial Property – Buildings and Land used for profit generation, including office buildings, medical centers, hotels, malls, retail stores, multifamily housing buildings, farmland, warehouses, and garages.
Commercial Lease/Tenancy – Nonresidential tenancy for property by for-profit entities.
Commercial Lease Enterprise/Commercial Enterprise Truck Leasing – Fleet management with Enterprise
Commercial Lease Broker – A real estate broker who holds a state real estate license and sells Commercial Real Estate.
Abandonment – The act of vacating the premises before fulfilling the terms of the agreement, without prior notice or consent, is considered abandonment.
Boilerplate Contract – Clauses in lease agreements that correlate critical legal points.
EBay – The eBay Website is helpful for rental properties with selling/buying items/furniture online.
Landlord and Tenant, also known as lessor and lessee, contract for leasing real estate. The landlord agrees to let the tenant use the property for a specified period in exchange for rent.
Lease Agreement vs. Rental Agreement – A lease agreement is usually for long lease contracts, typically 6 months or more, and a rental agreement is usually for short-term leases of 30 days.
Property Rentals – Real Estate assets that are owned by individuals and/or entities (businesses) which are rented out to Tenants/Occupants for a specific period of time in exchange for rent payments.
Appraisal – An appraisal is a professional evaluation of the value of a property by a licensed appraiser.
Closing Costs – Buyers and sellers typically incur various expenses beyond the property price to complete a real estate transaction. These expenses may include fees for title insurance, legal services, and more.
Cap Rate (Capitalization Rate) – A property’s profitability is measured by dividing its net operating income by its current market value.
NOI (Net Operating Income) – The net operating income equals total income by a commercial property after operating expenses have been deducted, excluding debt service and income taxes.
Cash Flow – The net operating income equals the amount of income a property generates after operating expenses and debt service have been subtracted.
Lease Term – The commercial lease term is the length or period of time that a tenant agrees to rent a property.
Tenant Improvements (TI) – Changes are made to commercial spaces to cater to a tenant’s specific needs.
Common Area Maintenance (CAM) – Charges paid by tenants for maintaining common areas in a commercial property.
Triple Net Lease (NNN) – A lease agreement in which the tenant pays rent, property taxes, insurance, and maintenance costs.
Gross Lease – A commercial lease in which the landlord pays for all property expenses, and the tenant pays a fixed rent.
Loan-to-Value (LTV) Ratio – The value is the ratio of a loan compared to the appraised asset value of the a property, used by lenders to assess risk.
Debt Service – The regular payment of principal and interest on a loan.
Zoning – Government regulations that control land use and structures within a specified area.
Commercial Real Estate Broker – A licensed professional who helps facilitate property transactions between buyers and sellers or landlords and tenants.
Due Diligence – Landlords should investigate the property before completing a transaction.
Escrow – A third party that holds funds or documents until the completion of a transaction.
Amortization – The process of paying the loan off with regular payments over time.
Appraisal – An estimation of a property’s value by a licensed appraiser.
Build-to-Suit – A customized construction project where a developer builds a property to meet a tenant’s specific needs.
Concessions – Incentives landlords offer to attract tenants, such as rent discounts or leasehold improvements.
Absorption Rate – The rate at which available space in a real estate market is leased or sold.
Covenant – A promise or agreement made in a lease or other legal document.