Real Estate Investment Principles

These flashcards cover the major vocabulary and concepts related to real estate investment principles, essential for understanding key terms and definitions in preparation for the exam.

Real Estate

Land and all things permanently attached thereto.

Real Property

Ownership rights associated with Real Estate.

Personal Property

Movable things and intangibles.

Fixtures

Personal Property until attached to a building, becoming part of Real Property.

Statute of Frauds

Requires almost every agreement relating to Real Property to be in writing to be enforceable.

Fee Simple Absolute

The most complete form of ownership in Real Property.

Easement

A non-ownership, non-possessory right to use or access land owned or leased by others.

Title

Determines ownership of Real Property and is evidenced by a Deed.

Deed

A document that grants or transfers title to Real Property from a Grantor to a Grantee.

Mortgage

A two-party Security Interest in Real Property to secure repayment of a Real Estate Loan.

Deed of Trust

A three-party Security Interest in Real Property to secure repayment of a Real Estate Loan.

Deficiency Judgment

Any loan balance remaining after a foreclosure sale can become a personal judgment against the Borrower.

Compounding

Approach to taking a Present Value to a Future Value.

Discounting

Approach to taking a Future Value back to Present Value.

Annuities (PMT)

Investments with constant future periodic payments.

Loan-to-Value Ratio (LTV)

Mortgage debt divided by property value.

Short Sale

When a lender allows the sale of a property for less than the outstanding loan balance.

Section 1031 Exchange

Trade the property for like-kind property to defer taxes on any capital gain.

Real Estate Investment Trust (REIT)

A company that owns, operates, or finances income-generating real estate.