Glossary

A subordination clause in real estate ensures priority for one party’s claim over others in case of default or bankruptcy.

Subletting occurs when a tenant rents out their home, with the subtenant taking on certain responsibilities. It requires careful consideration and legal compliance.

Short-Term Rentals (STR) are popular for travelers and offer higher earnings, but come with fluctuating demand and regulatory challenges.

Seller concessions cover buyer’s closing expenses, enhancing home affordability. Available for FHA, VA, and conventional loans, impacting sale price.

The term “pro rata” originates from Latin, meaning “in proportion,” commonly used in real estate, salaries, dividends, ensuring fair distribution.

A “prime” property in real estate stands out due to location, demand, amenities, and potential for appreciation, attracting high-value tenants.

The Internal Rate of Return (IRR) assesses project profitability, considering cash flow timing and the discount rate for investments.

Net Present Value (NPV) measures real estate profitability by analyzing cash flows, discount rate, and initial investment for decision-making.

Cap rate measures potential return on a property by comparing income to purchase price. 4-10% is typical, with lower rates in stable areas.

Capping in real estate sets a maximum limit on financial aspects like taxes, interest rates, and rent increases for predictability.