Definitions

Plain-English definitions of real estate and rental terms. 45 pieces so far.

What Is Workforce Housing?Housing priced for middle-income workers who earn too much for most subsidies but struggle with market-rate rents.Definition
What Is Vacancy Rate?The share of a property's rentable units or space that is empty, shown as a percentage of the total.Definition
What Is a Turnkey Property?A rental property that is renovated and ready to rent, or already rented, when you buy it, often with management in place.Definition
What Is a Trust Account in Property Management?A separate bank account where a property manager holds money that belongs to owners or tenants, such as rent and deposits.Definition
What Is a Sublease?An arrangement where a tenant rents all or part of their unit to another person while staying on the original lease.Definition
What Is Occupancy Rate?The share of a property's rentable units or space that is currently occupied, expressed as a percentage.Definition
What Is a Rent Roll?A report listing every unit in a property with its tenant, lease dates, rent, deposit and balance.Definition
What Is Market Rent?The rent a unit would likely command today in an open market, based on comparable rentals nearby.Definition
What Is a Ground Lease?A long-term lease of land only, where the tenant builds on and uses the land while the landowner keeps ownership of it.Definition
What Is Effective Rent?The average rent a tenant actually pays over the lease term after concessions like free months or move-in discounts.Definition
What Is the Gross Rent Multiplier (GRM)?A property's price divided by its gross annual rent, used as a quick screen to compare rental deals.Definition
What Is Cash-on-Cash Return?Annual pre-tax cash flow from a property divided by the total cash you invested, shown as a percentage.Definition
What Is a Cap Rate (Capitalization Rate)?A property's net operating income divided by its value or price, used to compare the earning power of income properties.Definition
What Is Net Operating Income (NOI)?The income a rental property produces after operating expenses, before mortgage payments, capital costs and income taxes.Definition
What Is a Tenant Improvement (TI)?Custom changes made to a commercial space to fit a specific tenant's needs, often funded partly by the landlord.Definition
What Is Percentage Rent?Rent in a commercial lease that includes a share of the tenant's gross sales, usually above a set threshold.Definition
What Is a Modified Gross Lease?A commercial lease where rent covers some operating costs and the tenant pays others, splitting expenses between both sides.Definition
What Is a Gross Lease?A lease where the tenant pays one flat rent and the landlord covers property taxes, insurance and maintenance.Definition
What Is an Estoppel Certificate?A signed statement from a tenant confirming the key facts of their lease, often required when a property is sold or refinanced.Definition
What Are Common Area Maintenance (CAM) Charges?Fees commercial tenants pay for their share of the costs to operate and maintain a property's shared areas.Definition
What Is a Triple Net Lease (NNN)?A commercial lease where the tenant pays base rent plus its share of property taxes, insurance and maintenance.Definition
What Is a Guarantor on a Lease?A person who agrees to pay rent and other lease obligations if the tenant does not, without living in the unit.Definition
How Does a 1031 Exchange Work?A tax-deferral strategy that lets investors sell real estate and reinvest the proceeds in like-kind property without paying capital gains tax right away.Definition
What Is Prorated Rent?A partial rent charge for only the days a tenant occupies a unit when they move in or out mid-month.Definition
What Is an Eviction?The legal process a landlord uses to remove a tenant from a rental property through the courts.Definition
What Is a Co-Applicant on a Rental Application?A second person who applies for a rental alongside the main applicant, plans to live in the unit and shares responsibility for the lease.Definition
What Is a Pet Deposit?A refundable amount a tenant pays to cover possible pet damage, held separately from or in addition to the security deposit.Definition
What Is a Certificate of Occupancy?A document from a local building department confirming a building meets code and may legally be occupied for its intended use.Definition
What Is Escrow in Real Estate?An arrangement where a neutral third party holds money or documents until the conditions of an agreement are met.Definition
What Are Amenities in Real Estate?Features, services or shared spaces that make a rental more comfortable or convenient, beyond the basic living space.Definition
What Is Tenant Screening?The process of evaluating rental applicants through credit, income, rental history and background checks before approving a lease.Definition
What Is Renters Insurance?An insurance policy for tenants that covers their belongings, personal liability and extra living costs after a covered loss.Definition
What Is a Duplex?A single building with two separate living units, each with its own entrance, kitchen and bathroom.Definition
What Is Fair Market Rent (FMR)?HUD's annual estimate of what a modest rental costs in an area, used to set housing voucher payment levels.Definition
What Does Affordable Housing Mean?Housing a household can afford while spending no more than about 30% of its income on rent or housing costs.Definition
What Is Appraised Value?A licensed appraiser's professional opinion of what a property is worth on a specific date.Definition
What Is a Security Deposit?Money a tenant pays at move-in that the landlord holds to cover unpaid rent or damage beyond normal wear and tear.Definition
What Is Depreciation in Rental Property?A tax deduction that lets landlords recover the cost of a rental building over its IRS-defined useful life.Definition
What Is a Capital Improvement?A lasting upgrade that adds value to a property, extends its life or adapts it to a new use, rather than a routine repair.Definition
What Is Landlord Insurance?Insurance for rental property owners that typically covers the building, liability claims and lost rental income.Definition
What Is Rent Control?Laws that limit how much and how often landlords can raise rent, often paired with limits on evictions.Definition
What Is a Condominium?A form of ownership where you own an individual unit outright and share ownership of common areas with other owners.Definition
What Is a Lessor?The owner who grants another party the right to use property under a lease in exchange for rent, also known as the landlord.Definition
What Is a Lessee?The person or business that rents property under a lease and pays rent to the owner, also known as the tenant.Definition
What Is a Lease Agreement?A legally binding contract that sets the terms under which a tenant rents property from a landlord.Definition

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