Whether you’re a new or experienced property manager, knowing common industry terminology is crucial. Understanding the correct terms to use while speaking with clients and other industry experts will make communicating far easier and bolster your reputation.
Below is a guide to help you learn some of the most common property management and rental terminology.
Common Property Management and Real Estate Terms
Abandonment: Abandonment is the relinquishment or surrender of a property, including real estate such as a housing unit or piece of land.
Accumulated Depreciation: This is the dollar amount of an asset’s depreciation from the time it was acquired to the most recent depreciation.
ADA: This abbreviation stands for The Americans with Disability Act, which prohibits all forms of discrimination against people with disabilities at the federal level.
Amortization: This is the repayment of a loan principal over time. Amortization equalized mortgage payments throughout the life of the loan by raising principal payments and lowering interest payments.
Annual Depreciation: This is the dollar amount representing the depreciation of an asset based on the most recent fiscal year.
Affordable Housing: Affordable housing is governed by federal or state agencies that control rent with an aim to aid individuals who meet specific criteria.
Agent: Agents are people who can legally act on behalf of another individual.
Amenities: These material and immaterial features increase a particular property’s value or make it more attractive to renters and buyers.
Apartment: An apartment is a residential unit inside a larger housing structure. Often, an apartment is considered a rented living space which differentiates it from condominiums and other analogous residential units.
Broker: Brokers are real estate professionals who receive a commission when buying and selling properties on behalf of other people. In order to become a broker, one needs to be licensed and eligible in their state of residence.
CAP Rate: A CAP rate, or capitalization rate, indicate the expected return rate on a real estate investment. These rates are used to assess a property’s potential and profitability.
Comparables: Also known as comps, comparables are part of a valuation technique that can determine the value of a current asset based on the sale price of a similar asset that was recently sold.
Condominium/Condo: These are buildings that contain multiple units owned by the residents living in them. Common areas and amenities in condos are owned equally by the owners of the units in the condo.
Conventional Housing: This kind of housing meets an area’s market rate limits or housing standards.
Co-Signer: A co-signer verifies the principal signer’s identity and/or provides additional assurance to a landlord or lender when signing a lease or mortgage.
Curb Appeal: Curb appeal is used to describe how inviting a property looks when viewed from the street level.
Depreciation: Depreciation is a reduction in the value of an asset caused by a loss of functionality, physical wear, or economic obsolescence.
Duplex: Duplexes are houses built with the intent of housing two separate households in the same building. A duplex can be built with separate side-by-side living spaces or units on different floors.
Equal Housing Opportunity: Equal housing ensures that all American citizens are able to access opportunities to live in different housing communities regardless of their age, disability, familial status, gender identity, nationality, race, or sexual orientation (as per The Fair Housing Act).
Equity: This is the difference between a property’s market value and the amount owed to the lender that holds the mortgage. Equity is the dollar amount the property owner would receive after paying back the mortgage in full.
Escrow Account: These are accounts opened by brokers with the purpose of holding funds for real estate transitions until they are successfully completed or canceled. Keeping these funds in a separate account ensures the buyer is able to finalize the transaction after being approved.
Ethics/Professionalism: These describe moral ideas and systems that guide professional decisions and behaviors on a daily basis.
Eviction: Eviction is a legal process through which landlords and property owners can remove a person from their property. Reasons landlords may evict tenants include violations to lease agreements or unpaid rent and mortgage payments.
Eviction Notice: These are legal notices that a landlord provides to a tenant to inform them of a pending eviction suit against them.
Fair Housing Act: This federal law aims to prevent and penalize discriminatory actions in the housing market based on several protected classes. These include familial status, gender, age, color, disability, nationality, race, and religion.
Fair Market Value: Also known as FMV, this is an agreed-upon price that buyers and sellers decide on after conducting negotiations based on current market conditions.
Fixed Expense: These items are expenses independent of rental income but are included in a rental property’s operating budget. For example, regardless of whether you have a renter or not, you will have to pay annual property taxes.
Flat Fee: This is the dollar amount for a monthly or yearly property management fee.
Homeowners Association: Homeowners associations, or HOAs, are organizations made up of homeowners living in a specific condo complex, planned community, or subdivision. HOAs aim to create and enforce community guidelines and building rules.
Housing Assistance Payments Contracts: Also known as HAP contracts, these allow private landlords to receive housing assistance on behalf of a low-income household that they rent to.
Housing and Urban Development (HUD): The HUD is the US Department of Housing and Urban Development. This department focuses primarily on increasing homeownership rates and access to affordable housing.
HVAC: HVAC systems are built into homes to create comfortable living conditions. HVAC stands for heating, ventilation, and air conditioning.
Income Levels: these are levels set by governments that offer statistics which aid in decision-making and determining things such as tax credit limits.
Interest: This is a percentage of the principal on a loan that a borrower must pay to access certain assets. In the real estate industry, interest often refers to mortgage interest rates that depend on the lender’s business decisions, the Federal Reserve Discount interest rate, and credit scores and reports.
Investment Property: These are properties purchased by investors to generate a profit, most often by renting out the property to tenants.
Landlord: These are property owners who receive rent payments from tenants who live in the landlord’s rental unit.
Landlord Insurance: These are insurance policies that protect landlords from financial losses related to their rental property. Generally, policies cover damage from theft and fire but may offer optional coverage options such as rent guarantee insurance and other legal protection.
Landlord-Tenant Law: These are part of the Common Law that outlines the responsibilities and rights of landlords and tenants.
Lead-Based Paint Disclosures: In 1996, the government created a regulation stating that families and individuals must be made aware of any lead paint used on the property they are moving into.
Lease: Leases are contracts that outline the rental terms and conditions agreed upon between a landlord and tenant.
Lease Option: Lease options are included in a lease agreement when a landlord elects to provide their tenant with an option to buy the property during or at the end of their tenancy. These options ensure the owner can’t sell the property to a third party before the lease expires.
Lease Renewal: This is when a landlord and tenant agree to continue a lease after the date of its initial expiration.
Lease Term: This is the duration of the tenancy as outlined in the lease agreement.
Leasing Agent: A licensed agent who leases properties and signs them on behalf of a lessor.
Lessee: The tenant who rents a property from a landlord
Lessor: The landlord who grants a lease to a renter.
Long-Term Rental: A lease agreement with a term exceeding one year.
Low-Income Tax Credit Properties: Also known as LITC properties, these assets offer landlords tax credits when signing a lease agreement with tenants deemed eligible by the IRS, HUD, and Justice Department.
Maintenance: A common term for common activities that keep a property in good condition.
Market Rate: The cost of a real estate transaction based on a seller’s expected price and the amount a buyer is inclined to pay.
Mortgage: This is a debt instrument which is outlined in a legal agreement that obliges a borrower to pay back a loan per the agreed terms while giving the lender a conditional ownership right on the property
Net Operating Income: Also known as NOI, this is a pre-tax figure detailing all revenue from a property after subtracting operating expenses excluding amortization, capital expenditures, and depreciation.
Operating Budget: This is a financial plan that predicts the property’s income that is balanced by specific annual expenses.
Percentage Fee: A property management fee based on a pre-agreed-upon percentage of a property’s gross income.
Persons with Disabilities Act: This act ensures equal opportunities for individuals with disabilities, which includes housing opportunities without discrimination.
Pet Screening: Similar to tenant screening, pet screening is a process that involves collecting information about a prospective tenant’s pet prior to allowing it to live in a rental property.
Pre-Qualification: An early stage of the bidding process that establishes the maximum loan an applicant can access.
Principal: An individual who appoints another person as their agent.
Property: Property is a real estate asset including land and any accompanying houses, sheds, or other permanent structures.
Property Inspection: A non-invasive visual inspection of a property that must be carried out by a qualified professional.
Property Management Agreement: These agreements detail the services, responsibilities, and payments agreed upon between a landlord and a property management company.
Property Manager: An individual who manages real estate properties that belong to others. Property managers are compensated for handling the rental’s accounting, maintenance, and rent collection.
Property Showing: A scheduled appointment where a landlord or property manager will provide a property tour to a prospective tenant.
Property Taxes: These taxes are based on a property’s value and are paid by the property owner to the local government.
Profit and Loss Statement: An annually generated financial report that details the rental’s net profit before any taxes.
Proration: This process breaks down and divides expenses proportionally based on various parties’ shares while owning or renting a property.
Real Estate: A section of land that does not need but may have attached permanent structures.
Real Estate Agent: An agent who is qualified to lease and sell real estate.
Realtor: A realtor is a professional real estate agent who belongs to the National Association of Realtors.
Rent Guarantee Insurance: Also known as rent default Insurance, this insurance protects landlords if renters encounter financial issues and are unable to pay rent.
Rent Collection: The act of collecting rent from tenants per the terms of the lease agreement.
Rent Roll: Rent rolls record information including tenant names, their rent rate, and records of their payments.
Rent to Own: A lease agreement that allows tenants an opportunity to purchase a property they are renting.
Rental Discount: Landlords may give tenants rent discounts based on previously agreed criteria. For instance, landlords may offer a discounted rate to tenants who automatically renew their leases.
Renter’s Insurance: These insurance policies cover renters’ personal belongings and liabilities but may offer more coverage depending on the insurer.
Rental Property: A house or rental unit occupied by tenants who pay the property owner in return for living in the space and accessing any permanent or temporary attached fixtures. The IRS considers houses, duplexes, or apartment complexes occupied by tenants and not serving as living quarters for the owner or any dependents to be permanent rental properties.
Rental Property Advertising: Marketing strategies and activities across multiple platforms that aim to fill vacancies quickly.
Rental Rate: The amount of rent a tenant pays to their landlord as detailed in the lease agreement.
Repairs: Attending to malfunctioning or broken items on the property. This also includes structural or aesthetic fixes.
Return on Investment: Also known as ROI, this is a metric that indicates how much profit an investor can make on their property as a percentage of the investment cost.
Sales Agent/Salesperson: An individual who conducts real estate activities with a licensed real estate broker.
Section 8: A government program allowing landlords to rent properties at equitable market rates for qualified low-income tenants. This voucher program relies on rental subsidy funds from the US Department of Housing and Urban Development.
Security Deposit: A payment landlords collect from tenants to secure funds that will cover any property damage at the end of a tenancy.
Single-Family House (SFH): A home built to house one family.
Subletting: Subletting is when a tenant rents part or all of a property to another tenant for a specific amount of time indicated in the tenant’s lease agreement.
Subsidy/Subsidized: Governmental financial assistance offered to a qualified group or individual. This includes funds for accessing the housing market.
Tenant: An individual residing in or temporarily possessing land, a building, or a specified rental unit per an agreement with a landlord for a fixed period.
Tenant Application: An application that renters fill out when applying to live in a specific rental property.
Tenant Damages: This is any damage that occurred during the lease term that isn’t considered normal wear and tear.
Tenant Screening: This process is conducted by landlords and property managers to determine whether a tenant is suitable for a specific rental property. Tenant screening often includes a credit check, interviews, and a background check.
Tenancy at Suffrage: A situation where a tenant has no lease but has permission to live on the property from the property owner. This is also known as a tenancy at will.
Three-Day Notice: A kind of eviction notice used in many states that demands a tenant to either pay outstanding rent within three days or vacate the property.
Townhouse: These houses often have two or three stories and are connected to matching houses by shared walls.
Turnkey Property: A residential property that can be rented out immediately after purchase.
Utilities: These are the essential services provided to residents and include electricity, garbage, gas, sewer, heat, and water.
Vacant Property: A property that is unoccupied and does not contain any personal belongings.
Vacancy Rate: A ratio between vacant rental units and total rental units in a building, city, or another operating category.
Vacation Rental: These fully furnished rentals are rented to guests for a short-term period such as two weeks or a month.
Walk-Through Inspection: An inspection conducted by a landlord during a tenant’s move-in and move-out dates to document any damage, missing items, or other issues on the property.
Writ of Restitution: This is a court order requested by a landlord when a tenant remains on their property after a grace period has passed. A writ allows landlords to request a forced eviction by a law enforcement officer.
Bottom Line
Knowing these terms will help you navigate the property management industry! For more resources and information, check out some of the other posts from Backed Homes.
