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The use of borrowed funds to finance the purchase of an asset, often with the expectation that the income or capital gain from the asset will exceed the cost of borrowing.

A rate of return on a real estate investment property based on the expected income that the property will generate, calculated as the net operating income divided by the current market value of the property.

The net amount of cash and cash-equivalent being transferred into and out of a business, particularly in the context of income generated by a rental property after all expenses have been paid.

A real estate investment strategy which a wholesaler contracts a home with a seller, then finds an interested party to buy it. The wholesaler sells the contract to the buyer, earning a profit in the process.

A legal arrangement in which a third party temporarily holds large sums money or property until a particular condition has been met (e.g., the fulfillment of a purchase agreement).

A real estate investment strategy that involves purchasing properties with the intent of selling them for a profit, usually after making improvements or repairs.

A company that owns, and in most cases operates, income-producing real estate. REITs offer a way for individual investors to earn a share of the income produced through commercial real estate ownership.

The increase in value of an asset over time, which can contribute to an investor's profit when the property is sold.

A calculation used to analyze real estate investments that generate income; NOI is equal to revenue from the property minus operating expenses.

A financial term used by lenders to express the ratio of a loan to the value of an asset purchased, calculated as the amount of the mortgage lien divided by the appraisal value of the property.

An accounting method of allocating the cost of a tangible asset over its useful life to account for declines in value over time. In real estate, it refers to a yearly tax deduction investment property owners can take for the wear and tear, deterioration, or obsolescence of the property.

An estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would likely pay to a knowledgeable, willing, and unpressured seller in the market.

The difference between the current market value of a property and the amount the owner still owes on the mortgage. It is the amount of money that would return to the homeowner if they sold the property and paid off the mortgage.

A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by forcing the sale of the asset used as the collateral for the loan.

A loan from private investors or companies at relatively high interest rates, primarily based on the value of the real estate used as collateral, rather than the borrower's creditworthiness.

A real estate investment strategy that involves buying a property, renovating it, renting it out to tenants, refinancing it for a higher amount than the original purchase price, and then using the funds to invest in another property.

A provision under the United States Internal Revenue Code (Section 1031) that allows an investor to defer capital gains taxes on the exchange of like-kind properties.

The percentage of all available units in a rental property, such as an apartment complex, that are vacant or unoccupied at a particular time

A rough measure of the value of an investment property that is obtained by dividing the property's sale price by its gross annual rental income.

The expenses, beyond the property cost, that buyers and sellers incur to finalize a real estate transaction, which include fees for insurance, appraisals, and escrow services.

A real estate transaction for the purchase of a property before a bank forecloses on it, in which the property is sold for less than the outstanding mortgage.

A form of indemnity insurance that protects the holder from financial loss sustained from defects in a title to a property.

A real estate investment strategy where an investor buys a property and rents it out for long-term income rather than selling it for a quick profit.

A legal document that grants ownership of a property, which is transferred from seller to buyer during the real estate transaction.

A type of mortgage loan with an interest rate that can change periodically, usually in relation to an index, and sometimes has caps on how much the interest rate or the payment can increase.

A tax on the profit realized from the sale of a non-inventory asset that was greater than the purchase price, most commonly assessed on property and investment gains.

A mortgage that has a fixed interest rate for the entire term of the loan, which provides consistent monthly payments and protection from rising interest rates.

The legal process by which a landlord may remove a tenant from a rental property, typically for not complying with an important term of the lease, such as paying rent or not vacating the premises after the lease has ended.

A financial institution that originates mortgage loans and holds a portfolio of loans instead of selling them off in the secondary market.