Key Concepts in Property Management

Key Concepts in Property Management & Rental Terminology

• Abandonment: Relinquishment of a property, encompassing land or housing units.
• Accumulated Depreciation: Total depreciation of an asset from acquisition to date, expressed in dollars.
• ADA: Americans with Disabilities Act, federal law prohibiting discrimination against individuals with disabilities.
• Amortization: The process of equalizing mortgage payments by adjusting the interest and principal over time.
• Annual Depreciation: Depreciation amount of an asset for the most recently completed fiscal year.
• Affordable Housing: Housing regulated by agencies to limit rent for qualifying individuals.
• Agent: A legal representative acting on behalf of another person in real estate transactions.
• Amenities: Features that enhance a property's appeal and value, both tangible and intangible.
• Apartment: Residential unit in a multi-family structure, generally rented and excluding condominiums.
• Broker: Licensed professional facilitating property transactions for others, earning a commission.
• CAP Rate: Capitalization rate assessing the potential return on a real estate investment.
• Comparables (Comps): Valuation technique using recently sold similar properties to estimate current asset value.
• Condominium: Building with individual owned units, with shared ownership of common areas.
• Conventional Housing: Housing that complies with local standards and market rates.
• Co-Signer: An individual signing a lease or mortgage alongside the primary signatory, providing assurance.
• Curb Appeal: Visual attractiveness of a property as seen from the street.
• Depreciation: Decline in an asset’s value due to wear, obsolescence, or functionality loss.
• Duplex: Residential structure housing two separate families or individuals.
• Equal Housing Opportunity: Ensures all individuals have equal access to various housing options regardless of attributes.
• Equity: The value difference between a property's market worth and the mortgage owed.
• Escrow Account: Account for holding funds during a real estate transaction until completion or cancellation.
• Ethics/Professionalism: Moral guidelines influencing professional behavior in real estate dealings.
• Eviction: Legal removal process of a tenant due to lease violations or unpaid rent.
• Eviction Notice: Formal notice to inform a tenant of a default in lease terms, leading to potential eviction.
• Fair Housing Act: Federal law ensuring no discrimination in housing based on protected characteristics.
• Fair Market Value (FMV): Price agreed upon by knowledgeable buyers and sellers after negotiation.
• Fixed Expense: Regular expenses that persist regardless of rental income, like property taxes.
• Flat Fee: Fixed monthly or yearly charge for property management services.
• Homeowners Association (HOA): Group of homeowners enforcing community rules within specific properties.
• Housing Assistance Payments (HAP) Contracts: Agreements facilitating rental assistance for low-income households.
• Housing and Urban Development (HUD): U.S. government department aimed at promoting homeownership and affordable housing.
• HVAC: Combined systems for heating, ventilation, and air conditioning to ensure indoor comfort.
• Income Levels: Government-established income thresholds used for various housing-related programs.
• Interest: Percentage charged on the principal by lenders, important in mortgage agreements.
• Investment Property: Real estate purchased to generate rental income.
• Landlord: Property owner receiving rent from tenants residing in rental units.
• Landlord Insurance: Policy protecting landlords from financial losses linked to their rental properties.
• Landlord-Tenant Law: State laws detailing rights and responsibilities of landlords and tenants.
• Lead-Based Paint Disclosure: Regulation requiring disclosure of hazardous materials like lead paint in homes.
• Lease: Contract granting a tenant exclusive use of a property for a specified period in exchange for rent.
• Lease Option: Agreement allowing tenants to potentially purchase the property during or after the lease.
• Lease Renewal: Continuation of the lease agreement beyond its initial term.
• Lease Term: Duration of a tenant's right to occupy the property as stipulated in the lease.
• Leasing Agent: Licensed professional managing the leasing process on behalf of the property owner.
• Lessee: Tenant renting a property from the landlord.
• Lessor: Landlord granting a lease to renters.
• Long-Term Rental: Lease agreements typically exceeding one year.
• Low-Income Tax Credit (LITC) Properties: Properties eligible for tax benefits when leased to qualifying low-income tenants.
• Maintenance: Regular upkeep and repairs necessary to maintain property condition.
• Market Rate: Tenancy pricing based on seller expectations and buyer willingness to pay.
• Mortgage: Debt secured by a property, requiring repayment per the loan agreement.
• Net Operating Income (NOI): Revenue from a property after removing essential operating expenses, excluding depreciation and amortization.
• Operating Budget: Annual financial plan outlining anticipated income and expenses related to a property.
• Percentage Fee: Property management charge based on a percentage of total rental income.
• Persons With Disabilities Act: Legislation ensuring equal housing opportunities for disabled individuals.
• Pet Screening: Process to assess tenant's pet backgrounds to minimize risks associated with pets in properties.
• Pre-Qualification: Initial stage of loan approval determining an applicant's borrowing capacity.
• Principal: Individual who appoints an agent for representation in transactions.
• Property: Real estate asset including land and permanent structures.
• Property Inspection: Non-invasive examination of a building by a qualified professional.
• Property Management Agreement: Document detailing the responsibilities and services agreed upon between landlord and property manager.
• Property Manager: Individual responsible for managing a property, including responsibilities such as maintenance and rent collection.
• Property Showing: Scheduled event for potential tenants to tour a property.
• Property Taxes: Taxes owed by property owners based on assessed property values.
• Profit and Loss Statement: Annual financial report detailing net profit before tax obligations.
• Proration: The division of expenses proportionally according to ownership or rental agreements.
• Real Estate: Land and buildings or structures attached to it.
• Real Estate Agent: Licensed professional representing buyers or sellers in real estate transactions.
• Real Estate Cycle: Phases of market activity including recovery, expansion, hyper supply, and recession.
• Realtor: Real estate agent who is a member of the National Association of Realtors.
• Rent Guarantee Insurance: Coverage for landlords in case renters default on payments.
• Rent Collection: Process of obtaining rental payments from tenants.
• Rent Schedule: Document listing rental rates and payment terms for the property.
• Rent Roll: Record of tenants, their due rent amounts, and income received.
• Rent to Own: Agreement allowing tenants to purchase the property under specific terms.
• Rental Discount: Fee reduction granted to tenants meeting pre-set conditions.
• Renter Insurance: Policy covering tenant's personal belongings and liabilities.
• Rental Property: Property leased to tenants, generating rental income for the owner.
• Rental Property Advertising (Marketing): Activities aimed at attracting potential tenants and filling vacancies.
• Rental Rate: Amount charged by landlords for the tenancy.
• Repairs: Actions taken to fix or replace damaged or outdated property features.
• Return on Investment (ROI): Measure of profitability expressed as a percentage of the initial investment.
• Sales Agent/Salesperson: Licensed professional conducting real estate operations with a broker.
• Section 8: Government program subsidizing rental payments for low-income households.
• Security Deposit: Advance payment from tenants to cover potential damages to the property.
• Single Family House (SFH): Residence designed for occupancy by a single family.
• Subletting: Tenant renting to another party during their lease term.
• Subsidy/Subsidized: Government financial assistance to aid specific groups in accessing housing.
• Tenant: Individual residing in a property under a lease agreement.
• Tenant Application: Form filled by potential renters interested in a property.
• Tenant Damages: Damages incurred by a tenant during occupancy beyond normal wear and tear.
• Tenant Screening: Verification process of a tenant's background by landlords or managers.
• Tenancy at Suffrage: Occupancy without a lease, typically with landlord consent after the lease expires.
• Three-Day Notice: Eviction notice requiring payment of overdue rent or vacating the property within three days.
• Townhouse: Multi-story residence connected to similar homes by shared walls.
• Turnkey Property: Ready-to-rent property requiring no immediate investment to make it habitable for tenants.
• Utilities: Essential services provided to properties, such as water, electricity, and gas.
• Vacant Property: Unoccupied property lacking residents or personal belongings.
• Vacancy Rate: Proportion of unoccupied rental units compared to the total available.
• Vacation Rental: Furnished property rented to guests for short durations, typically for leisure purposes.
• Walk-Through Inspection: Documentation inspection conducted during tenant move-in and move-out to note property condition.
• Writ of Restitution: Court order enabling the landlord to evict a tenant post-eviction notice period.

Real Estate Investing

• Investing in real estate can be pursued without a formal business or finance degree.
• Familiarity with accounting terminology aids in understanding and managing rental properties.

Glossary of Accounting Terms

• A curated list exists detailing common accounting terms related to rental properties.
• Each term is provided with a clear definition and context to enhance understanding.
• Some terms offer links to additional resources for further exploration and in-depth discussions.