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A Terms

Abandonment – The voluntary relinquishment of an interest, claim, privilege or possession of property.

Abatement – A period of time when a renter takes possession of real property prior to or outside the time period of the primary term of the lease, also referred to as free rent or early occupancy.

Ad Valorem – From the Latin “according to value.” A tax imposed on a property as a percentage of the property’s value, usually based on the valuation of the property by the local government.

Adjusted Gross Income – Gross income of a building if fully rented, minus a percentage for estimated vacancies.

Adviser – An owner’s representative in a real estate transaction. An adviser may be a real estate broker, consultant or investment banker.  Advisers may be paid a retainer and/or a performance fee upon the close of a financing or sales transaction.

Alternative Or Specialty Investment – Unconventional property type that is not considered a standard institutional-grade real estate investment, such as self-storage units, mobile home parks, agricultural land, and parking lots.

Amenity – A natural or man-made feature that enhances the desirability of a property, such as a view, swimming pool or access to water, but that is not necessary to its use.

Apartment Conversion – When an apartment building is converted to individually owned units, such as a condominium.

Apartment Rehabilitation – The extensive renovation of an aging apartment building.

Application – The first step in the official loan approval process usually involves the form used to evaluate the potential borrower’s information needed for the underwriting process.

Appreciation – An asset’s increase in market value due to market changes, currency devaluation, or other economic factors.

As- Is Condition – A tenant’s or buyer’s acceptance of a property’s existing condition, including and regardless of any physical defects, at the time a sale/lease is contracted.

Assessment – A fee imposed on property owners, usually to pay for public improvements such as water, sewers, streets, or curb and sidewalk installations.

Assessor – A county or state government official who is responsible for determining the value of a property for the purpose of taxation.

Asset – Items of value owned by individuals or businesses, such as real property, cash, personal property.  Assets that can quickly be converted to cash are called “liquid assets” like stocks or similar equities.

Asset Management Or Property Management – The various disciplines involved with managing real property assets from the time of investment through the time of disposition.  Asset management includes appraising, acquisition, and financing; managing and leasing; operational and financial reporting; audits, market review and, ultimately, asset disposition.

Asset Management Fee – Fee charged for the management of a real estate investment, based on the amount invested into real estate assets for the fund or account, to the investors.

Assets Under Management – The total market value of real estate assets for which an asset or property manager has investment and asset management responsibility.

Assignee Name – Party or legal entity to which an asset, including any obligations attached to it such as leases, mortgages or other contracts, has been transferred.

Assignment – Transfer of the lessee’s interest in a property, including all of its obligations, as opposed to a sublease where the lessee transfers less than the lessee’s entire interest to the subletting party.   An assignment usually must be approved or consented to by the owner/landlord.

Average Common Equity – Calculation of total equity of a property by adding five most recent quarters and dividing by five.

Average Free Rent – The average monthly rent abatement allowed to a tenant as part of a lease incentive due to current market conditions.  An incentive commonly used in hard-to-rent areas or as a concession for tenant improvements.

Average Occupancy – The percentage of a property occupied over the preceding twelve (12) months divided by twelve (12). High occupancy rates are desired to maximize return on investment (ROI).

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