A Property Management and Landlord’s Glossary of Terms
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Why Is a Glossary Needed?
Real estate, especially rental real estate, is a specialized field with its own technical property management terms, jargon, and acronyms. New investors in rental properties need to communicate effectively with a wide variety of real estate professionals and service providers. Some of the most important terms for landlords to know are presented here, in alphabetical order.
Key Property Management Terms
ADA: Acronym that stands for The Americans with Disability Act, a federal law that prohibits any form of discrimination against people with disabilities.
CAP Rate: Stands for capitalization rate, a way of expressing the anticipated rate of return from a real estate investment property; used to evaluate the investment’s potential and profitability.
Co-Signer: A secondary signer on a lease or mortgage when a lender or landlord requires extra assurance of the ability to pay.
Equity: The difference between a property’s market value and the amount owed on the property to a bank or other lender.
Eviction: A legal process through which a current tenant or squatter can be removed from a property.
Eviction Notice: A legal notice from a landlord informing a tenant of a pending eviction suit against them.
Fair Housing Act: A federal law that prohibits discrimination in the housing market based on age, color, disability, familial status, gender, nationality, race, or religion.
Fixed Expense: An expense item independent of rental income yet still part of a rental property’s operating budget, such as property taxes.
Landlord Insurance: An insurance policy that protects a landlord from certain financial losses associated with a rental property, such as vandalism or fire.
Lease: A contract outlining the terms and conditions under which a landlord gives a tenant the exclusive right to occupy a rental property for a fixed term in exchange for rent payments for the duration of the contract.
Lease Termination Letter: Correspondence sent by a landlord or property manager notifying a current resident that their lease is nearing expiration and will not be renewed.
Net Operating Income (NOI): A before-tax figure showing all revenue from a rental property after essential operating expenses have been subtracted. (Does not subtract capital expenditures, amortization, or depreciation.)
Notice to Vacate: A letter from a tenant to a landlord or property manager informing them of the tenant’s intent to vacate an apartment at the end of the lease period or before.
Operating Budget: A financial plan based on a forecast of the property’s income and expenses over a one-year period.
Pet Deposit: A deposit required from pet-owning tenants to cover any damages caused by the pet or pet-related cleaning expenses when the tenant moves out.
Pet Screening: Collecting information and verifying the status of assistance animals to determine whether to allow an animal to stay in a rental unit.
Property Management Agreement: An agreement clarifying the services to be provided to a landlord by a property management company and outlining the responsibilities of each party and the nature of the financial relationship.
Property Manager: A person compensated for managing a property (e.g., collecting rents, tracking expenses, screening tenants, providing maintenance services, etc.) owned by someone else.
Profit and Loss Statement: An annual financial report showing a rental property’s real net profit before any taxes.
Real Estate Agent: A qualified agent who leases and sells real estate properties.
Realtor: A professional real estate agent who belongs to the National Association of Realtors.
Rent Guarantee Insurance (Rent Default Insurance): Insurance coverage that protects a landlord against financial loss when a renter defaults on rental payments.
Rent Roll: A register showing tenants’ names, the rent amount due, and the total rental income received.
Renters Insurance: An insurance policy covering a tenant’s personal possessions.
Security Deposit: A payment collected from a tenant by the landlord to cover any property damage caused by the tenant that goes beyond normal wear and tear.
Short-term Leases: Any lease agreement with a duration of less than the standard 12 months, such as a month-to-month or six-month lease agreement.
Subletting: A rental arrangement in which a tenant rents out their unit to a new tenant.
Tenant Screening: Carried out by the landlord or property management company to verify a potential tenant’s background; may include a credit check, criminal records check, and interviews.
Vacancy Rate: The ratio of vacant units to the total number of units in a rental property or geographic area.
Having a team on your side to help you through all the ins and outs of property management is essential. Get in touch today to find out how we can help.
