In the first part of this two-part series on real estate investing terms, we covered 50 real estate terms you should know beginning with the letter A-F. If you missed it, be sure to check it out here. Today we’ll be continuing with the rest of the alphabet. So, let’s get started!
Glossary of Real Estate Investing Terms G-Z
1. Hard Money Loan
A hard money loan is a type of short-term loan typically used to finance the purchase of a fix and flip property. These loans are often easier to qualify for than traditional loans, but they usually come with higher interest rates.
2. Home Inspection
A home inspection is a thorough inspection of a property to identify potential problems, which a professional home inspector often does. This is typically done before purchasing a property, and it can help reveal any necessary repairs that need to be made. While real estate investors don’t have to hire a professional home inspector, it’s often a good idea to do so to ensure you’re not investing in a money pit.
3. Hot Leads
A hot lead is a lead that’s ready to buy or sell a property now. These leads are often motivated by a specific situation, such as an impending foreclosure, divorce, or job transfer. Hot leads are the most sought-after type of lead by real estate investors because they’re more likely to result in a quick sale. These might also be referred to as motivated seller leads.
4. House Hacking
House hacking is a type of real estate investment in which an investor lives in a property while renting out extra space to tenants. This strategy can help offset the cost of ownership and make it easier to save for a down payment on another investment property.
5. iBuyer
An iBuyer is a company that uses technology to streamline the home-buying and selling process. These companies often make instant offers on properties and can close quickly. However, their offers are typically lower than a traditional buyer might be willing to pay. While iBuyers are typically associated with traditional home buyers, several iBuyers now focus on buying properties from investors.
6. Joint Venture (JV)
A joint venture sounds complicated, but it’s actually just a business arrangement where two or more parties cooperate on a project. For example, two investors might put money together to buy and fix up a piece of property.
7. Inheritance Leads
An inheritance lead is a lead that’s inherited property from a deceased family member. These leads can be excellent opportunities for investors because the heirs might not have the emotional attachment to the property that other sellers might have.
REIPrintMail offers inheritance lead lists that include the contact information for a recently deceased property owner and up to 12 of their relatives. These leads are a source of incredibly motivated sellers that have inherited properties through a will or trust. This type of situation often results in the immediate sale of the property. Since all property owner deaths within a county are typically included in these lead lists, this creates an opportunity to find deeply discounted houses.
8. Lead Generation
Lead generation is the process of generating leads, or potential customers, for your business. In real estate, this might involve using online ads, direct mail marketing, or cold calling to attract motivated sellers.
The first step of growing your real estate investing business is generating significant quantities of quality leads. With REIComplete’s 17+ years of experience, knowledge, and intel, our lead generation team can deliver results that radically transform our client’s businesses. You can learn more about how we can help you take your business to the next level here.
9. Lead Processing
Lead processing is the process of qualifying and nurturing leads until they’re ready to buy or sell a property. In real estate, this might involve sending personalized letters or postcards, making phone calls, or meeting in person to build relationships with potential sellers.
Growing as a real estate investor requires two things – more leads and a system to determine which opportunities are best. And, since processing these leads takes time, you’ll need to delegate the task to someone else once you’re closing one or more deals each month. At REIComplete, our lead processors can screen and qualify your leads for you so that you can focus on closing more deals. Schedule a discovery call with us today to learn more!
10. LeadScrubber
LeadScrubber is an advanced proprietary tool REIPrintMail offers to help investors clean up their mailing lists before a marketing campaign. This is a great way to clean up your lists to remove any properties that have already been sold, so you’re not wasting marketing dollars on them. Our LeadScrubber tool is easy to use, you simply upload your list (or ask us how we can do this for you), and LeadScrubber will add the following fields to your file: Last Sold Data, Last Sold Price, and MLS Status.
11. Leverage
Leverage is the use of debt or other financial instruments to increase the potential return on investment. For example, a real estate investor who puts down 20% on a property and finances the remaining 80% is using leverage. This can be a great way to increase your return on investment, but it can also increase your risk.
12. Lien
A lien is a legal claim on a property that’s been used as collateral for a loan. The most common type of lien in real estate is a mortgage, which the lender places on a property until the loan is paid off.
13. List Management
List management is the process of keeping track of your leads and customers. In real estate, this might involve using a CRM (Customer Relationship Management) system to store contact information, notes, and deals in progress.
14. Mailing Lists
An effective mailing list is a key to success when sending out direct mailers. Here at REIPrintMail, we firmly believe that for a mailing list to be truly effective, it must have three vital characteristics: first, the data included in the list must be accurate and current; second, the leads should be targeted strategically to fit your seller persona perfectly; and lastly, because you’ll need a certain number of leads to get a deal, the number of leads on your lists matters.
Some of the advanced mailing lists we offer include the following:
- Cash Buyers
- Vacant Land
- Foreclosures
- Commercial Properties
- Pre-Foreclosures
- Liens
- Absentee Owners
- Mobile Homes
- Vacancies
- Bankruptcies
- And a lot more!
15. Managed Services
End-to-end solutions like managed services are perfect for real estate investors because they handle everything from lead generation to call answering and lead qualification. For example, REIComplete provides access to full-service marketing and lead generation teams, technologies, and systems—all for the cost of a part-time employee.
REIComplete strives to make your business more efficient by having a team handle the aspects of your business that you don’t have time for so that you can focus on what’s important – closing deals with prospects. We offer three different variations of our services, each customizable to better fit your needs, all with one goal – to get you deals! Our managed services subscriptions start at just $997 a month. Discover all that we can do for you by clicking here.
16. Mortgage
A mortgage is a loan that’s used to finance the purchase of a property. Mortgages are typically paid back over 15 or 30 years and usually come with fixed interest rates. Real estate investors often use mortgages to finance the purchase of investment properties. Here are some different types of mortgages you might come across:
- Conventional Mortgages: A conventional mortgage is a loan that’s not insured or backed by the government. These loans typically have fixed interest rates and terms of 15 or 30 years.
- FHA Loans: A Federal Housing Administration (FHA) loan is a mortgage that the FHA insures. These loans usually have lower down payments and interest rates than conventional loans, but they come with stricter guidelines.
- VA Loans: A loan guaranteed by the Veterans Administration (VA) is available to active-duty military members, veterans, and their spouses. These loans often have no down payment or private mortgage insurance requirements.
- USDA Loans: A loan backed by the United States Department of Agriculture (USDA) is available to buyers in rural areas. These loans often have low-interest rates and no down payment requirements.
17. Motivated Seller
A motivated seller is a seller who’s motivated to sell their property for various reasons. This can include needing to relocate, wanting to avoid foreclosure, being distressed, or simply wanting to get rid of the property. Motivated sellers are often more willing to negotiate on price, which can be an excellent opportunity for real estate investors.
18. Multiple Listing Service (MLS)
The MLS is a database of properties for sale that real estate brokers maintain. Only MLS members, which are primarily real estate agents and brokers, can gain access to this database. As a real estate investor, you can work with a real estate agent or broker to gain access to the MLS and find properties that fit your investment criteria. You can also search for MLS listings on sites like Zillow and Realtor.com.
19. Net Operating Income (NOI)
Net operating income tells you how profitable a property is. To calculate it, subtract the property’s operating expenses from its gross operating income. For example, if a property has a gross operating income of $10,000 and operating expenses of $5,000, then its NOI would be $5,000. This profit metric is helpful for real estate investors because it can help them compare different properties and assess their profitability.
20. Occupancy Rate
The occupancy rate is the percentage of tenants occupying a property’s units. For example, if a property has 100 units and 90 of those units are occupied, the occupancy rate would be 90%. An occupancy rate can be a good indicator of a multi-family property’s profitability. A high occupancy rate usually means a property generates enough income to cover expenses.
21. Option Agreement
An option agreement is a contract that gives the buyer the right to purchase a property within a certain period of time. Real estate investors often use option agreements to secure properties before they’re put on the market. This allows them to buy the property at a lower price before it’s available to the general public.
22. Offer
An offer is a proposal to buy a property at a specific price. When you make an offer on a property, the seller can accept, reject, or counter your offer. If your offer is accepted, you and the seller will sign a purchase agreement. If your offer is rejected or the seller counters your offer, you’ll have the opportunity to negotiate further or walk away from the deal.
23. Opening Bid
The opening bid is the first offer made on a property. The opening bid is usually lower than the asking price, and it’s used to start the negotiation process.
24. Opt-In
Opt-in is when someone permits you to contact them. For example, visitors can opt-in to receive your newsletter if you have a website with a newsletter sign-up form. Before contacting any potential real estate investment leads, you must do your research and understand the local laws and regulations. Different areas have laws concerning acceptable methods of contact (via email, text, or phone call). The financial penalties can be costly if you violate these rules by reaching out to someone without explicit permission.
One of the significant advantages of direct mail marketing is that there are no laws or regulations governing how to contact someone through the mail. This makes it one of the most preferred and effective ways to market to motivated sellers.
25. Outbound Calling
Outbound calling is the process of making phone calls to potential customers or leads. Our REIComplete Pro and Advanced subscriptions come with an outbound call team to work your leads, saving you time by screening and qualifying them. This way, you can ensure that as many deals are captured from each campaign.
REIComplete’s outbound calling team can help you with all your warm leads, follow-up calls, prospect screening, and outbound appointment setting. With our help, you won’t have to chase down or deal with “difficult” prospects anymore. This means you’ll have more time to focus on talking to motivated sellers so you can close more deals. Book a free discovery call with us today if you’re ready to learn more.
26. Out-of-State Owner
An out-of-state owner is someone who owns property in a state other than the one they reside in. Out-of-state owners often have different motivations for selling their properties than local owners. For example, an out-of-state owner may be more motivated to sell quickly because they’re not as familiar with the local market.
27. Owner-Occupied Property and Owner-Occupied Rental
Owner-occupied property is a piece of real estate that’s owned and used as someone’s primary residence. On the other hand, an investor could also have an owner-occupied rental property that they reside in that also generates rental income. With that said, to classify as an owner-occupant of an investment property that you also intend to live in, that property cannot be used solely as a rental, and it cannot be your second home. It must be your primary home.
28. Owner Financing
Owner financing is when a property owner agrees to provide financing to the buyer. This type of financing is often used when the buyer doesn’t qualify for a traditional loan. With owner financing, the buyer and seller will agree on terms, such as interest rate, repayment schedule, and balloon payments (if any).
29. Passive Investor
A passive investor is someone who invests in real estate but doesn’t actively manage their properties. They might, for example, invest in a real estate syndication or a crowdfunding platform.
30. Passive Income
Passive income is any type of income that doesn’t require active work to generate. For example, if you invest in rentals, the income you receive from those investment properties would be considered passive income.
31. Private Lender
A private lender is an individual who provides financing for a real estate transaction. Private lenders are often family and friends, but they can also be individuals who are part of a private lending network.
32. Probate Leads
Probate leads include the contact information for prospects that have recently inherited a property as determined by a legal probate case or are in the process of doing so. Probate properties are often sold shortly after being inherited, making this one of the best “motivated sellers” lists available.
33. Property Ownership Types
There are several types of property ownership, and each has its own set of rules and regulations. The most common types of ownership are:
- Fee Simple – The most common type of ownership where the owner has full rights to the property and can use it as they wish.
- Leasehold – The owner has the right to use the property for a specific time. When the lease expires, the property goes back to the landlord.
- Condominium – A type of ownership where each unit owner has title to their unit and an undivided interest in the property’s common areas.
- Co-Op (Cooperative) – A type of ownership where each shareholder has a proprietary lease for their unit and owns a share of the corporation that manages the property.
34. Purchase Agreement
A purchase agreement is a contract between a buyer and seller that outlines the terms of a real estate transaction. The purchase agreement should include the price, financing terms, appraisal contingency, home inspection contingency, date of possession, and other relevant details.
35. Real Estate Investment Trust (REIT)
Investing in a REIT is a great way to get exposure to the real estate market without actually owning any property. REITs are publicly traded companies that own and operate income-producing real estate, so they provide investors with an easy way to invest in real estate.
36. Real Estate Syndication
A real estate syndication is when a group of investors comes together to finance a real estate investment deal. The investment dollars collected by the real estate syndication can be used to purchase, renovate, and operate the property.
37. Rehab
Rehab is short for rehabilitation. When you rehab a property, you’re fixing it up so it can be sold or rented. Rehabbing a property can be a great way to add value and generate income.
38. Rent-To-Own (RTO)
Rent-to-own, or RTO, is when a tenant agrees to rent a property for a set period of time with the option to purchase the property at the end of the lease. The terms of the lease are typically agreed upon upfront, and the tenant usually has to put down a small option fee.
39. Ringless Voicemail (RVM)
Ringless voicemail, or RVM, is a technology that allows you to leave a voicemail on someone’s phone without their phone ringing. This can be useful for real estate investors because it allows you to leave a message without disturbing the person.
40. Section 1031 Exchange
A section 1031 exchange is when an investor sells a property and reinvests the proceeds into another “like-kind” property. This allows the investor to defer paying capital gains taxes on the sale of the property.
41. Seller Disclosure Statement
A seller disclosure statement is a document that a seller must provide to a buyer that outlines any known defects or problems with the property. The seller disclosure statement is required by law in some states, and it’s a good idea to have one even if it’s not required.
42. Senior Homeowners
If you’re an investor, homeowners aged 55 or older can be a great market to target. This is because many of them may want to sell for various reasons, such as health concerns, the death of a spouse, or not wanting to own property anymore. When looking for potential sellers in this age group, most investors will seek out those who have lived in their homes for 20 years or more or those with reverse mortgages.
43. Short Sale
A short sale is when a property is sold for less than the mortgage’s outstanding balance. Short sales can be an excellent way to buy a property at a discount, but they can also be time-consuming and complicated.
44. Short-Term Rentals (STRs)
Short-term rentals, or STRs, are when a property is rented out for a short time, typically 30 days or less. Some examples of STRs include AirBNB rentals and vacation rentals. These can be a great way to generate income from your investment property, but some challenges, such as dealing with different types of guests and managing turnover, come with them.
45. Skip Tracing
Skip tracing is the process of finding someone who’s gone missing. This can be useful for real estate investors because it allows them to find sellers who may have moved and are no longer living at their property. We offer some of the best skip-tracing services in the industry at best-in-class pricing. You can learn more about our premium skip-tracing services here.
46. Sweat Equity
Sweat equity is the value of your work on a property. For example, if you renovate a property yourself, sweat equity would be the value of your labor.
47. Tax-Assessed Value
The tax-assessed value is the value of a property determined by the government for tax purposes. This value is usually lower than the market value of a property.
48. Tax Lien
A tax lien is a government claim on a property for unpaid taxes. These properties are typically then sold at a discount. Investors can also reach out to homeowners with tax liens and offer to purchase their property from them at a discounted rate before the government auctions the home.
49. Title & Title Search
A title is a document that proves ownership of a property. When you buy a property, the title will be transferred from the seller to the buyer during closing. A title search is when a title company does a background check on a property to ensure there are no outstanding liens or other problems with the title.
50. Wholesaling
Real estate wholesaling is when an investor contracts a home with a seller, then finds a third party to buy it. The wholesaler contracts the home with the buyer at a higher price than they contracted it for from the seller and keeps the difference as profit. For new investors and those who need more money to purchase a property outright, wholesaling can be an excellent way to get started in real estate investing.
The Bottom Line
This concludes our two-part series on real estate investing terms every investor should know. We hope you found it helpful and informative. Remember to bookmark this page so you can refer back to it! And if you missed part one, you could check it out here.
