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Multifamily Real Estate Glossary

Multifamily Real Estate Glossary

What is the Direct Capitalization Method in Real Estate?

The Direct Capitalization Method in real estate estimates a property's value by dividing its net operating income by a capitalization rate derived from comparable market sales, primarily used for properties with stable income streams.

May 9, 2024

What is an Intercreditor Agreement in Real Estate?

An Intercreditor Agreement in real estate is a legal document between multiple creditors that outlines their rights, priorities, and obligations concerning shared security interests in a borrower's assets to manage risk and coordinate actions in case of default.

May 9, 2024

What Does Borrowing Base Mean in Real Estate?

In real estate, a "borrowing base" is the discounted value of collateral properties used by lenders to determine the maximum loan amount they are willing to offer, ensuring the loan is adequately secured by the property's appraised market value.

May 9, 2024

What is the Texas Ratio?

The Texas Ratio measures a bank's credit risk by comparing non-performing assets to capital and reserves. In real estate, it helps assess the financial health of entities with significant property investments by indicating potential market distress and guiding risk management.

May 9, 2024

What is a Triple Net (NNN) Lease?

A triple net lease is a real estate lease agreement where the tenant is responsible for all property expenses, including taxes, insurance, and maintenance.

May 9, 2024

What are Ad Valorem Taxes?

Ad valorem taxes are taxes levied based on the assessed value of property, including real estate and personal items, and are a primary source of revenue for local governments.

May 4, 2024

What is a Quiet Title Action?

A quiet title action is a legal process to resolve disputes or claims against a property's title, ensuring clear ownership by removing any liens or other encumbrances.

May 4, 2024

What is a Cloud on Title?

A cloud on title in real estate refers to any claim, lien, or encumbrance that casts doubt on the ownership of property and needs to be resolved before the property can be clearly transferred or sold.

May 4, 2024

What Does Accession Mean in Real Estate?

Accession refers to the legal acquisition of additional property or value through natural processes or human actions, thereby potentially altering the property's value and boundaries.

May 4, 2024

What is Accelerated Depreciation in Real Estate?

Accelerated depreciation is a tax strategy that allows property owners to depreciate their assets more quickly, reducing taxable income and improving cash flow in the early years of property ownership.

May 4, 2024
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