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Glossary of terms. To help you better understand property investment.

Navigating the world of property investment can be an exhilarating yet complex endeavour. Whether you’re a seasoned investor or a novice entering the realm of real estate, understanding the specialised terminology is crucial for success. To help you unravel the intricacies of property investment, we have compiled a comprehensive glossary of terms that will empower you with the knowledge needed to make informed decisions and speak the language of the industry.

Property investment is a multifaceted field that requires a solid understanding of various concepts and their practical implications. By familiarising yourself with the terminology, you’ll be better equipped to evaluate opportunities, communicate effectively with industry professionals, and mitigate risks along your investment journey.

Within this glossary, you will find concise definitions, explanations, and examples of essential terms related to property investment. We have taken care to ensure that the definitions are accessible and easy to comprehend, even if you are new to the world of real estate.

In the dynamic world of property investment, knowledge is power. This glossary will provide you with the foundation you need to confidently navigate the complexities of the market, seize opportunities, and build a successful investment portfolio.

So, without further ado, let’s dive into the world of property investment and unlock the language of real estate, one term at a time.

A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | Y | Z

Absentee Owner

An absentee owner refers to an individual or corporate entity that possesses a specific property but is not actively involved in its management or occupation. Such owners typically have minimal interaction with their property, entrusting its day-to-day management to third-party agents or property managers.

Abstract of Title

An abstract of title is a condensed overview of a property’s complete history of ownership, transfers, and any legal proceedings associated with it. This document is crucial for prospective buyers or investors to evaluate the legal status of a property and ensure that there are no encumbrances or disputes that could affect its value or marketability.

Appraiser

An appraiser is a qualified individual with the knowledge, experience, and expertise necessary to determine the value of a property. They use a variety of methods and tools to assess a property’s market value, such as conducting a physical inspection, analysing comparable sales data, and evaluating local market conditions. Their expertise is crucial for property investors and lenders in making informed decisions regarding the value and potential of a property.

Bad Title

A bad title refers to a legal document of property ownership that fails to confer ownership to its holder due to unresolved legal or financial issues. This can include unpaid taxes, liens, encroachments, or other legal disputes that affect the property’s title. A bad title can significantly diminish the value and marketability of a property, and it is crucial for prospective buyers or investors to conduct a thorough title search to ensure that the property’s title is clear and marketable.

Balloon Loan

A balloon loan is a type of lending arrangement that features lower monthly payments during the loan’s term but requires a lump-sum payment at the end of the loan period. Unlike traditional loans that fully amortize over time, a balloon loan’s payment schedule does not cover the full principal and interest amount. Instead, a significant balance, known as the balloon payment, remains due at the end of the loan term. This type of loan can be advantageous for property investors who anticipate a significant cash inflow at the end of the loan period, such as the sale of the property or refinancing. However, it is crucial to carefully consider the risks and costs associated with balloon loans, including the possibility of not being able to make the balloon payment when it is due.

Bank-owned Property

A bank-owned property refers to a real estate asset that has been taken into a financial institution’s inventory. This occurs when a homeowner is unable to make mortgage payments, and the lender forecloses on the property to recover the outstanding debt. Once the property is foreclosed, the bank or other financial institution becomes the legal owner of the property, and it is classified as a bank-owned property. These properties can present unique investment opportunities for buyers, as they are often priced below market value and may offer the potential for profitable returns. However, it is important to conduct thorough due diligence and assess any potential risks before investing in bank-owned properties.

Best and Final Offer

A best and final offer is a prospective buyer’s last and highest bid or proposal to purchase a property. This offer is typically made after a round of negotiations or bidding with the seller, and it represents the buyer’s maximum willingness to pay for the property. The best and final offer is a crucial step in the buying process, as it signals to the seller that the buyer is serious about acquiring the property and has exhausted their negotiating power. It is important for buyers to carefully consider their financial capacity, market conditions, and the property’s value before making a best and final offer.

Broad Hectare Land

Broad hectare land, also known as greenfield land, refers to undeveloped land that has been identified for potential residential or commercial development. This type of land is typically located on the outskirts of urban areas or in suburban regions and can offer significant opportunities for property investors and developers. Broad hectare land is often purchased by developers with the intention of subdividing it into smaller lots and constructing new homes or commercial buildings. However, this type of development can be complex and time-consuming, as it requires obtaining necessary permits, conducting environmental assessments, and installing necessary infrastructure. Despite these challenges, investing in broad hectare land can be a lucrative long-term investment strategy for those with the expertise and resources to successfully navigate the development process.

Buyer Agent

Buyer Agent is a licensed real estate professional who exclusively represents the buyer in a real estate transaction. The buyer agent’s main responsibility is to assist the buyer in finding a property that meets their needs, negotiating the best price and terms on behalf of the buyer, and guiding them through the transaction process. Buyer agents have a fiduciary duty to act in the best interest of the buyer, including maintaining confidentiality, providing complete and accurate information, and disclosing any material facts that could affect the buyer’s decision-making process. They may also provide advice and guidance on market trends, property values, and other factors that could impact the buyer’s purchase decision.In most cases, the buyer agent is compensated through a commission paid by the seller or the seller’s agent. However, some buyers may choose to pay their agent directly for their services.

Cadastre

A cadastre is a public record of land boundaries that identifies and delineates individual land holdings. This register is maintained by government agencies and is used to establish legal ownership, property boundaries, and other relevant information for landowners and property investors. The cadastre includes detailed maps, property descriptions, and other relevant information such as property taxes, zoning regulations, and land use restrictions. This information is crucial for property investors and developers to understand the potential and limitations of a given property and to make informed investment decisions. The cadastre is an important tool for ensuring property rights and for supporting the efficient and sustainable management of land resources.

Capital Improvement

A capital improvement refers to a permanent structural change or restoration made to a property to enhance its value or extend its useful life. Capital improvements can take many forms, including the addition of new rooms or features, the replacement of outdated or worn-out components, and the installation of energy-efficient systems or appliances. Unlike routine maintenance or repairs, which are necessary for the property’s upkeep, capital improvements are investments that increase the property’s overall value and potential for long-term profitability. Property investors often make capital improvements to their properties to attract tenants, increase rental income, or prepare for a potential sale. It is important to carefully consider the costs and benefits of a capital improvement before making a significant investment, as some improvements may offer higher returns than others.

Catchment

In the property investment context, a catchment refers to the geographic region serviced by a particular centralized service or function, such as emergency services or a commercial development. For example, the catchment area for a shopping centre might be defined by the radius within which a certain percentage of the population lives or works, and it would be used to estimate the potential customer base for the centre. Similarly, the catchment area for a hospital might be defined by the distance that patients are willing to travel to receive medical care, and it would be used to evaluate the demand for healthcare services in the region. Understanding the catchment area for a particular property can be crucial for property investors and developers in assessing its potential value and profitability. Factors that may affect the catchment area include population density, demographics, transportation infrastructure, and competing services or developments in the region.

Central Business District

Central Business District, which refers to the primary commercial and business hub of a town or city. The CBD is typically located in the centre of the urban area and is characterized by high-rise office buildings, corporate headquarters, financial institutions, and other commercial establishments. The CBD is often the most expensive and desirable location for businesses due to its proximity to other major commercial centres, transportation hubs, and other amenities. Property investors and developers may focus on acquiring and developing properties within the CBD to take advantage of the high demand and potential for long-term growth and profitability. However, investing in CBD properties can also be challenging due to high prices, limited space, and competition from other investors and developers.

Certificate of Title

A Certificate of Title is a legal document that provides proof of ownership for a particular property. The certificate includes information such as the property’s legal description, the name of the registered owner, any registered interests or encumbrances (such as mortgages or liens), and any other relevant details about the property’s ownership history. The Certificate of Title is typically issued by a government agency, such as a land registry or a title office, and serves as an official record of the property’s ownership and legal status. When purchasing or investing in a property, it is important to obtain a current and accurate Certificate of Title to ensure that there are no outstanding issues or disputes that could affect the property’s value or ownership rights. The Certificate of Title is an essential document for property investors and developers, as it provides critical information for assessing the property’s potential for investment and development.

Commercial Real Estate

Commercial Real Estate refers to property that is primarily used for business or commercial purposes rather than residential or personal use. Examples of commercial real estate include office buildings, retail spaces, warehouses, industrial parks, hotels, and other properties that are designed to generate income or facilitate business activities. Commercial real estate is typically owned and managed by businesses, investors, or commercial property developers who seek to generate rental income, capital appreciation, or both. Investing in commercial real estate can be a lucrative strategy for property investors, as it offers potential for higher returns than residential real estate, but also comes with greater risks and complexities. Factors that can affect the value and profitability of commercial real estate include location, property type, market demand, rental rates, maintenance costs, and regulatory factors such as zoning laws and building codes.

Crown Land

Crown Land, also known as State Land, refers to land that is owned and managed by the government for the benefit of the community. Crown Land is typically used for a variety of purposes, such as conservation, recreation, infrastructure, and public services. The management and use of Crown Land is governed by various laws and regulations, which vary depending on the jurisdiction and the intended use of the land. In some cases, Crown Land may be leased or sold to private individuals or organizations for commercial or residential development, subject to certain conditions and restrictions. Investing in Crown Land can offer unique opportunities for property developers and investors, but it also requires a thorough understanding of the regulatory and legal framework that governs the use and development of Crown Land. Crown Land is a valuable resource for communities and governments, as it can support a wide range of social, economic, and environmental objectives, and plays a critical role in shaping the built environment and the overall quality of life for residents.

Debt Consolidation

Debt Consolidation is a financial strategy that involves combining multiple debts into a single larger debt, typically with a lower interest rate and a longer repayment period. The goal of debt consolidation is to simplify the repayment process and reduce the overall cost of borrowing by consolidating high-interest debts, such as credit cards, personal loans, and other unsecured debts, into a single loan with a lower interest rate and a fixed payment schedule. Debt consolidation can be particularly useful for property investors who have multiple loans or debts related to their investments, as it can help to reduce the burden of managing multiple payments and improve cash flow. Debt consolidation loans can be obtained from a variety of lenders, including banks, credit unions, and online lenders, and may be secured or unsecured, depending on the borrower’s creditworthiness and the collateral available. Before consolidating debts, property investors should carefully evaluate their financial situation and compare the costs and benefits of different consolidation options to determine whether debt consolidation is the right strategy for their needs.

Delinquent

Delinquent refers to something or someone who has failed to meet a legal obligation, such as making a required payment against a loan or fulfilling a contractual obligation. In the context of property investing, delinquent borrowers are those who have failed to make mortgage payments on time and are in danger of defaulting on their loans. Delinquent loans can result in foreclosure, which is the legal process by which a lender takes possession of a property that has been used as collateral for a loan. Delinquent borrowers may also face legal action, such as the imposition of fines or penalties, or the loss of other assets or privileges. Property investors should be aware of the risks associated with delinquent loans and take steps to mitigate those risks, such as by performing due diligence on borrowers, monitoring loan performance, and seeking professional advice as needed.

Demography

Demography is the study of human populations, including their size, growth, distribution, and composition. Demographic data can provide valuable insights for property investors, such as identifying trends in population growth and migration, as well as changes in consumer behavior and preferences. Demographic factors, such as age, income, education, and ethnicity, can also help property investors to understand the needs and preferences of different market segments, and to tailor their investment strategies accordingly. Property investors may use demographic data to identify opportunities in emerging markets, assess the potential demand for specific types of properties, and determine the optimal pricing and marketing strategies for their investments. Demographic data can be obtained from a variety of sources, such as government census data, market research reports, and surveys. Property investors should use caution when interpreting demographic data, however, and seek the advice of qualified professionals to ensure that their investment decisions are based on accurate and reliable information.

Development Approval

Development approval refers to the permission granted by a local government or planning authority for a proposed development to proceed. It is required before any significant development or building work can take place on a property, and is obtained by submitting a development application that complies with local planning regulations and guidelines. The application is assessed to determine whether the proposed development is appropriate for the site, taking into account factors such as zoning, land use, building standards, environmental impact and community consultation. If the application is approved, the developer can proceed with the proposed development subject to any conditions imposed by the authority.

Distressed Sale

A distressed sale occurs when a property owner is forced to sell their property quickly and at a reduced price due to unfavourable circumstances. These circumstances may include financial difficulties, divorce, death, or other life events that make it difficult or impossible for the owner to continue owning the property. Distressed sales can create opportunities for property investors to acquire properties at below-market prices, but they can also be risky due to the potential for hidden defects, liens, or other issues that may affect the value or title of the property. Property investors who are interested in distressed sales should conduct thorough due diligence, including obtaining a property inspection, reviewing title and lien reports, and consulting with legal and financial professionals as needed. Additionally, property investors should have a clear understanding of the local real estate market and the demand for similar properties in the area to ensure that the investment is financially viable.

Dwelling

A dwelling refers to a structure or building that is designed and used as a place of residence for people. It can include single-family homes, apartments, townhouses, and other types of residential properties. The term “dwelling” is often used in real estate and property management to distinguish between residential and commercial properties, as commercial properties are not intended for use as a place of residence. The characteristics of a dwelling can vary widely depending on the type of property, such as the number of bedrooms and bathrooms, the square footage, the layout and design, and the features and amenities. Property investors should consider a variety of factors when evaluating a dwelling, such as its location, condition, rental potential, and market demand, to determine its potential for investment and to make informed decisions about acquiring or managing the property.

Dual Occupancy

Dual occupancy refers to a type of property that allows two separate dwellings to exist on the same land. These dwellings can either be attached, such as duplexes, or detached, such as a main house and a granny flat. Dual occupancy is becoming increasingly popular as it offers an affordable way to maximise the use of land while still providing separate living areas. It is particularly attractive to investors looking to generate rental income from two separate tenancies on a single block of land. Dual occupancy can also be an option for families looking to house multiple generations under one roof.

Earning Assets

Earning assets refer to investments that generate income and have the potential to appreciate in value over time. They are typically considered to be a more attractive investment option than non-earning assets, such as collectibles or personal items, as they can provide a steady stream of income and have the potential for capital appreciation. Earning assets can include a wide range of investments, such as stocks, bonds, rental properties, and businesses. In real estate, earning assets can include residential or commercial properties that generate rental income or increase in value over time. Property investors may seek out earning assets as part of their investment strategy, as they can provide a reliable source of income and build long-term wealth. However, it is important to conduct thorough research and due diligence to ensure that the earning asset is a sound investment and aligns with the investor’s goals and risk tolerance.

Encroachment

Encroachment is a term used in real estate to describe when a property owner’s use of their land extends onto another property owner’s land without permission. This can occur in a variety of ways, such as building a structure that crosses a property line, planting trees or shrubs that extend onto another property, or placing a fence or retaining wall in a way that encroaches onto neighbouring land. Encroachment can result in legal disputes between property owners, particularly if it interferes with the use or enjoyment of the neighbouring property. It is important for property owners to understand their property boundaries and seek legal advice if they suspect that they are encroaching on a neighbouring property or if they believe that their property is being encroached upon. Encroachment can also impact property values and may need to be resolved before a property can be bought or sold.

Escrow Agent

An escrow agent is a third-party individual or organisation that is responsible for holding property or funds in trust until a transaction is finalised or a dispute is resolved. In real estate transactions, an escrow agent is often used to hold the buyer’s deposit until the closing of the sale. This ensures that the funds are available to complete the transaction and protects both the buyer and the seller from fraud or other issues. The escrow agent is typically a neutral party that does not have any interest in the outcome of the transaction, and their role is to ensure that all terms and conditions of the transaction are met before releasing the property or funds to the appropriate party. In some cases, an escrow agent may also be used to hold funds for property repairs or other contingencies. It is important to choose a reputable and trustworthy escrow agent to ensure that the transaction is handled properly and to avoid any potential fraud or other issues.

Eviction

Eviction is a legal process that allows a landlord to remove a tenant from their rental property. Eviction may be necessary if the tenant fails to pay rent, violates the terms of the lease, or engages in illegal activity on the property. The eviction process typically begins with the landlord serving the tenant with a notice to vacate the premises. If the tenant does not vacate the property by the specified date, the landlord may then file a lawsuit to obtain a court order for eviction. The eviction process can be lengthy and costly, and it is important for both landlords and tenants to understand their legal rights and obligations. In some cases, alternative dispute resolution methods, such as mediation, may be a more appropriate way to resolve disputes between landlords and tenants.

Fair Market Value

Fair market value is the estimated price at which a property would sell in an open and unrestricted market transaction between a knowledgeable and willing buyer and a knowledgeable and willing seller. The fair market value takes into account various factors, including the property’s location, size, condition, and other characteristics that affect its value. It is an objective assessment of what the property is worth in the current market conditions. Fair market value is an important concept in real estate transactions, as it is used to determine the price that a buyer is willing to pay and that a seller is willing to accept. Real estate appraisals are typically used to determine the fair market value of a property.

Flipping

Flipping is a short-term investment strategy in which an investor purchases a property, usually with the intention of renovating or improving it, and then selling it quickly for a profit. The goal of flipping is to buy low, add value, and sell high. Flipping is commonly associated with real estate, but it can be applied to other assets as well. Successful flipping requires an understanding of the local real estate market, the ability to identify undervalued properties, and the skills to renovate or improve a property quickly and efficiently. Flipping can be a high-risk, high-reward strategy, as the investor must invest significant time, effort, and money into the property before seeing any return on investment.

Foreclosure

Foreclosure is the process by which a bank or other lending institution takes ownership of a property after the borrower fails to make their mortgage payments, and then sells the property to recover the outstanding loan balance. It is a common term in the real estate industry, particularly in relation to distressed properties.

Fractional Ownership

Fractional ownership is a type of co-ownership where multiple parties own a share or fraction of a property. This allows several individuals to collectively own a high-value asset, such as a vacation home, yacht, or private jet, and share the costs and responsibilities of ownership. Each owner has the right to use the property for a certain period each year based on their share of ownership. Fractional ownership is a popular option for those who want to own a luxury property or asset but cannot afford to do so on their own.

Gentrification

Gentrification is a term used in property investing to describe the process of revitalizing or redeveloping a run-down or underutilized area in a city, typically resulting in an increase in property values and higher-end businesses moving in.

Grace Period

A grace period is a specified period of time after a payment is due, during which the payment can be made without penalty or late fees. The length of a grace period is typically specified in a contract or loan agreement and can vary depending on the type of payment and the terms of the agreement. For example, a credit card issuer may provide a grace period of 21 days after the billing cycle closes, during which the cardholder can pay the balance in full without accruing interest.

Gross Earnings

“Gross Earnings” or “Gross Income” refers to the total income earned from a rental property before any deductions such as expenses, taxes, or management fees.

Holdover Tenant

A holdover tenant, in the context of property investment, can refer to a tenant who continues to occupy a rental property beyond the end of their lease term, without signing a new lease agreement. In some cases, a holdover tenant may be allowed to stay on a month-to-month basis, but this can create uncertainty and potential legal issues for both the tenant and the landlord.

Home Equity

Home equity is the difference between the current market value of a property and the outstanding mortgage balance owed on it. It is the portion of the property that the homeowner actually owns and has the right to use as collateral for a loan or other financial purpose. As the homeowner pays down their mortgage, or as the property increases in value, their equity in the property grows. Home equity can be an asset that can be used to secure loans or lines of credit, finance home improvements, or serve as a source of wealth for the homeowner.

Housing Affordability

Housing affordability refers to the ability of a household to purchase or rent a home within their budget without experiencing excessive financial stress. It takes into account factors such as household income, property prices, and mortgage interest rates. Housing affordability is an important issue, particularly in areas where property prices are high relative to local incomes, as it can lead to housing stress, homelessness, and social inequality. Governments, advocacy groups, and industry bodies often monitor and work to improve housing affordability through a variety of policies and initiatives.

Infill Development

Infill development refers to the construction of new buildings or homes on previously developed land within an existing urban area, usually in established neighbourhoods, commercial areas, or vacant lots in a city or suburb. It can involve the redevelopment of underutilized or abandoned properties or the subdivision of larger parcels of land. Infill development typically creates a denser and more compact urban environment, promotes sustainable use of resources, and can revitalize declining neighbourhoods.

Income Splitting

Income splitting is a tax planning technique that aims to shift income from a high-income earner to a low-income earner in order to reduce the overall tax burden on the household. This is typically achieved by diverting income to a family member who is in a lower tax bracket.

Inflationary Risk

Inflationary risk, also known as purchasing power risk, refers to the possibility that the future value of an investment may decrease due to inflation. Inflation is the increase in prices of goods and services over time, and it erodes the purchasing power of money. Therefore, inflationary risk is the uncertainty over the future real value of an investment due to changes that reduce the investment’s worth caused by inflation. This risk is particularly relevant for long-term investments, where the impact of inflation can compound over time. Investors often seek investments that can provide a hedge against inflation to mitigate this risk.

Investment Real Estate

Investment real estate refers to a type of property that is purchased with the intention of generating income or appreciation, rather than being used as a primary residence. Examples of investment real estate include rental properties, commercial buildings, and raw land that is held for potential development or future sale. The value of investment real estate is often determined by its potential to generate income, and investors may use a variety of strategies such as renovations, lease agreements, and property management to maximize their return on investment.

Joint Tenancy

Joint tenancy is a form of property co-ownership in which two or more people jointly own a property with equal shares and have an equal right to possess the property. If one owner dies, their share passes on to the other owner(s) automatically. Joint tenancy usually involves the right of survivorship, which means that the surviving owner(s) inherit the deceased owner’s share of the property without the need for probate.

Jurisdiction Risk

jurisdiction risk refers to the potential risk arising from the different laws, regulations, and political systems in different countries or jurisdictions. This can include differences in legal systems, tax codes, political stability, and cultural norms that can affect the ability to do business or invest in that jurisdiction. Jurisdiction risk can impact investments, businesses, or financial transactions, and may affect the level of legal protection or the availability of remedies for disputes.

Kickback

In the context of property investing, a kickback can refer to an illegal payment made to a real estate agent, property manager, or other service provider in exchange for favourable treatment or services. It is important to note that kickbacks are unethical and often illegal, as they involve the exchange of money or other incentives in return for preferential treatment or services.

Land Value

Land value is the estimated worth of a piece of land or a property without including any of the structures built on it or any other improvements made to it. It is determined based on various factors, such as the location, size, zoning, and potential uses of the land. The land value can be used to calculate the total value of a property, which includes the value of the land and the value of the improvements.

Leasehold Improvement

Leasehold improvements refer to any renovations, alterations, or additions made by a tenant to a leased property to better suit their needs or preferences. These improvements are typically made at the tenant’s expense and are usually intended to increase the value or functionality of the space. Examples of leasehold improvements include the installation of new fixtures or equipment, the modification of existing walls or partitions, and the replacement of flooring or lighting.

Lenders Mortgage Insurance

Lenders Mortgage Insurance (LMI) is an insurance policy that a borrower may be required to pay to protect a lender against financial losses in the event of a borrower’s default (failure to pay) on a mortgage loan. LMI is usually required when the borrower has a deposit of less than 20% of the property’s purchase price. It is a one-time fee and can be paid upfront or added to the loan amount. LMI provides a safeguard for the lender but does not protect the borrower.

Lien

A lien is a legal claim or hold on a property to secure the payment of a debt or obligation. It can be placed on the property by a creditor or lender and gives them the right to seize and sell the property if the debt or obligation is not repaid.

Marginal Land

Marginal land is a term used to describe land that has limited economic value due to factors such as poor soil quality, limited access to water, steep slopes, or environmental hazards. This type of land may not be suitable for agriculture, residential development or commercial use.

Mediation

Mediation is a process of conflict resolution in which an impartial third party, called a mediator, helps parties in a dispute to communicate with each other, identify issues, and work towards a mutually acceptable agreement. Mediation is often used as an alternative to going to court or as a way to resolve disputes more quickly and cost-effectively than through traditional litigation.

Medium Density Housing

Medium density housing refers to residential developments that have a higher density than traditional suburban detached housing, but lower density than high-rise apartments. This includes various types of attached housing such as townhouses, duplexes, triplexes, and small apartment buildings.

Month-to-Month Tenancy

month-to-month lease, is a type of rental agreement that automatically renews every month unless either the landlord or tenant gives written notice to terminate the agreement. This type of tenancy provides more flexibility for both parties compared to a fixed-term lease that has a set end date.

Mortality Rate

Mortality rate is a statistical measure that calculates the number of deaths in a specific population during a particular time period. It is usually expressed as the number of deaths per 1,000 or 100,000 individuals per year. Mortality rate is often used by governments and healthcare organizations to track and analyse death trends and to evaluate the effectiveness of health interventions and policies.

Mortgage Accelerator

A Mortgage Accelerator is a program or a type of account that helps borrowers pay off their mortgage faster than the original loan term. It works by allowing the borrower to deposit their income directly into the mortgage account, reducing the principal balance and therefore, the interest charged on the loan. This can help borrowers save thousands of dollars in interest over the life of the loan and pay off their mortgage years earlier than expected.

Mortgagee

Mortgagee refers to the lender or financial institution that provides a mortgage loan to a borrower for the purpose of purchasing a property. The borrower is required to make monthly mortgage payments to the mortgagee until the loan is fully paid off. If the borrower defaults on the loan, the mortgagee has the legal right to take possession of the property through foreclosure.

Negative Equity

Negative equity, also known as being “underwater” on a mortgage, occurs when the value of a property decreases to the point where it is worth less than the outstanding balance on the mortgage for that property. This can happen when property prices decline, or when the owner takes out a mortgage with a high loan-to-value (LTV) ratio and the property value subsequently falls. Negative equity can create financial difficulties for homeowners, as it can limit their ability to sell the property or refinance their mortgage, and can result in the loss of their investment if they are unable to keep up with mortgage payments.

Negative Gearing

Negative gearing is a property investment strategy that involves borrowing money to purchase a property that generates less income than the cost of owning and maintaining it. The resulting loss can be claimed as a tax deduction to reduce the investor’s taxable income. It is a common strategy used by property investors in Australia.

Net Worth

Net worth is the value of all assets owned by an individual, company, or other entity, minus all liabilities owed by that entity. In other words, it is the difference between what someone owns and what they owe. Net worth can be used as a measure of financial health or as a way to track progress towards financial goals. A positive net worth means that an individual or entity has more assets than liabilities, while a negative net worth means that liabilities exceed assets.

Non-Negotiable

Non-negotiable means that something is fixed and cannot be changed or modified. This term is often used in real estate negotiations to indicate that certain terms or conditions are not open for discussion or compromise.

Offset Mortgage

In an offset mortgage, the balance of the borrower’s savings account is subtracted from the outstanding mortgage balance, reducing the amount of interest the borrower pays on the mortgage. This type of mortgage can be an effective way for borrowers to reduce the amount of interest they pay on their home loan, while still having access to their savings.

Open House

An open house is a period of time during which a property is open for prospective buyers or tenants to view the property. It is usually hosted by the real estate agent representing the property, and it allows for multiple interested parties to visit the property at the same time.

Owner-Occupied

Owner-occupied refers to a property that is used as a primary residence by the owner of the property. This is in contrast to an investment property or a property that is rented out to tenants.

Party Wall

Party Wall is a shared wall or boundary wall that stands on the land of two or more different owners or tenants. It usually divides two adjoining properties and is used by both parties. The wall can be a load-bearing wall, i.e., it supports the weight of the buildings on either side of it, or it can be a non-load-bearing wall, i.e. it is simply a dividing wall that separates two spaces. In many cases, party walls may also contain chimneys, flues, or other shared components that serve both properties. The rights and responsibilities of each party regarding the party wall are usually defined in a legal agreement or a party wall award.

Principal Residence

A principal residence, also known as a primary residence, is the main dwelling where a person lives and considers their home. It is typically where the individual’s household is located, where they receive their mail and where they are registered to vote. The property is occupied by the owner and is not used for rental purposes.

Private Sale

Private Sale refers to a real estate transaction where the property is not listed publicly for sale and is instead sold directly by the owner or through a private arrangement with a buyer, without the involvement of a real estate agent. In this case, the sale price is negotiated between the seller and the buyer without any involvement of a real estate agent. Private sales are typically less formal than sales facilitated by real estate agents and may have less legal protections and paperwork involved.

Property Manager

Property Manager is an individual or a company that is hired by a property owner to manage the day-to-day operations of a rental property. The property manager is responsible for finding tenants, collecting rent, handling maintenance and repair issues, and ensuring that the property is following all applicable laws and regulations. They act as an intermediary between the landlord and the tenants and are responsible for making sure that both parties are satisfied with the rental arrangement. Property managers typically charge a percentage of the monthly rent as their fee.

Quantity Surveyor

A quantity surveyor is a professional who works in the construction industry, providing services related to cost estimation, contract administration, and management of construction projects. They are responsible for estimating and managing the costs of construction projects, including preparing cost plans, bills of quantities, and schedules of work. They also advise clients on procurement strategies, cost management, and risk analysis. Quantity surveyors typically work closely with architects, engineers, contractors, and other construction professionals to ensure that construction projects are completed within budget and on schedule.

Qualified Appraiser

A qualified appraiser is an individual who has been professionally trained and accredited to provide a reliable and unbiased assessment of the value of an asset, including real estate. They typically have a deep understanding of the factors that influence property values and have experience in analysing market trends, comparable property sales, and other relevant data to arrive at an accurate valuation. A qualified appraiser may work independently, for a property valuation company, or for a financial institution or government agency.

Quorum

To be more precise, quorum is the minimum number of members required to be present in a meeting, assembly or other group in order for business to be legally transacted. The exact number required may be defined in the governing documents of the organization, such as the constitution or bylaws, and can vary depending on the organization and the nature of the business to be transacted.

Real Estate Agent

A real estate agent is a licensed professional who assists clients in buying, selling, or renting properties. They act as intermediaries between buyers and sellers or landlords and tenants, providing expertise in real estate transactions and helping clients navigate the complex process of buying, selling, or renting property. Real estate agents typically work on a commission basis, earning a percentage of the final sale price of a property or a percentage of the rent for a leased property. They are required to complete education and training requirements and obtain a license in the state in which they operate.

Rent Roll

A rent roll is a document or list that details the rental properties owned by a landlord or property management company, along with the names of the tenants and the amount of rent owed. Rent rolls are used to keep track of rental income and can also be used to value a rental property. In some cases, rent rolls can be bought and sold as an asset, with the new owner taking over the management of the rental properties listed on the roll.

Reserve Fund

A reserve fund is a designated account where money is set aside to cover future expenses for maintaining and repairing a property or to cover unexpected expenses. It is typically used for larger, more expensive repairs or replacements that are beyond the scope of regular maintenance. Reserve funds are commonly used in condominiums or strata-titled properties, where the owners share the cost of maintaining the common property. The fund is usually funded through a portion of the monthly strata fees or condominium maintenance fees paid by the owners.

Risk Participation

Risk participation in property investment or real estate involves multiple stakeholders sharing the risks and rewards of a specific investment or project. Through joint ventures or partnerships, investors, developers, lenders, and others pool their resources and expertise, spreading the potential risks and enabling access to larger-scale ventures. This collaborative approach helps to mitigate individual risk exposure and increases the potential for success in the dynamic real estate market. Participants enter into agreements that outline their financial contributions, decision-making authority, profit distribution, and exit strategies. Thorough due diligence and professional advice are crucial when considering risk participation, ensuring transparency and protecting the interests of all involved parties.

Sealed Bid Auction

In a sealed bid auction, all bidders submit their bids in a sealed envelope, and the highest bidder wins the item being auctioned. The bids are usually opened in private, and the winning bidder is notified after the auction has ended. This type of auction is often used for high-value items, such as art, real estate, or other assets, and is also commonly used in government procurement processes.

Security Deposit

A security deposit is a sum of money paid by a tenant to a landlord or property manager at the start of a lease or rental agreement. The deposit serves as a form of insurance to protect the landlord in case the tenant fails to pay rent, damages the property, or violates any terms of the lease. At the end of the lease, the landlord will return the security deposit to the tenant, minus any deductions for repairs or unpaid rent.

Solicitor

A solicitor is a legal professional who provides legal advice and assistance to clients. They are trained and licensed to practice law, and can represent clients in legal matters such as conveyancing, contracts, wills and estates, and litigation. Solicitors may work in private practice or for government agencies, corporations, or non-profit organizations. They are typically responsible for preparing legal documents, conducting research, negotiating settlements, and representing clients in court.

Squatter

Squatting involves taking over a property, typically a vacant or abandoned one, without the legal right to do so. The term “squatting” can also refer to the act of living in a property without paying rent or a mortgage. Squatters often claim their right to occupy the property under common law or adverse possession laws, which vary by jurisdiction. Squatting is generally considered illegal in most countries, although laws and regulations governing the eviction of squatters vary widely.

Spruiker

A spruiker is a person or company that promotes or advertises a particular property or investment opportunity to potential buyers, often using high-pressure sales tactics or making exaggerated claims about potential returns. The term is often used in a negative connotation within the real estate industry.

Sublease

A sublease is an arrangement in which a tenant who is renting a property from a landlord rent all or a portion of the property to a third party. In a sublease, the original tenant becomes the sublessor and the new tenant becomes the sublessee. The sublessee pays rent to the original tenant, who in turn pays rent to the landlord. The terms of a sublease are typically outlined in a sublease agreement between the original tenant and the sublessee, but the landlord’s permission may be required before a sublease can take place.

Surveying

Surveying is the process of measuring and mapping the relative positions of natural and man-made features on the earth’s surface. It involves using a variety of tools and techniques to accurately determine the size, shape, and location of land, as well as other features such as buildings, roads, and bodies of water. Surveying is commonly used in the fields of construction, engineering, and land development to ensure that building projects are in the correct place and adhere to regulatory requirements.

Tax Deduction

In Australia, a tax deduction refers to an expense that can be claimed as a deduction against a person’s taxable income, which reduces the amount of tax they need to pay. The Australian Taxation Office (ATO) provides a list of deductions that can be claimed, which include work-related expenses, charitable donations, and investment property expenses, among others. It is important to note that deductions must be claimed within the guidelines set out by the ATO and must be substantiated with proper documentation

Tax Exempt

Tax exemption is a legal provision that allows certain types of income or transactions to be excluded from taxation. In Australia, there are various types of tax exemptions, such as income earned by charitable organizations, government entities, and certain types of trusts. Additionally, some products or services may be exempt from certain taxes, such as goods and services tax (GST). Examples of tax-exempt goods and services include basic food items, medical services, and education services. However, it’s important to note that not all products or services are tax-exempt, and different rules may apply depending on the jurisdiction and circumstances.

Tenement

In Australia, a tenement generally refers to any land or property that is leased or rented from a government authority. This may include things like mining rights or exploration permits for natural resources. The term “tenement” is often used in relation to the mining industry, where it refers to the area of land that is subject to a mining lease or other form of mining tenure.

Title Search

A title search is a process of examining public records to determine the legal ownership and history of a property. It is usually conducted by a title company, a real estate attorney or a settlement agent as part of a real estate transaction. The purpose of a title search is to identify any potential issues or defects that may affect the ownership of the property. This includes checking for liens, judgments, easements, or other encumbrances that may affect the property’s title. The title search results in a title report that provides a detailed summary of the property’s ownership history, as well as any issues or defects that were found.

True Lease

A true lease is a legal and financial term that refers to a type of lease agreement in which the lessee (the tenant or user of the asset) has the exclusive right to use and possess a leased asset in exchange for periodic payments over the lease term. The lessor (the owner of the asset) retains ownership of the asset throughout the lease term and is responsible for maintenance and repair of the asset. The true lease is also known as a operating lease, as it is typically used for short-term rental of equipment or other assets for business purposes. At the end of the lease term, the lessee may have the option to renew the lease or return the asset to the lessor.

Underwater Mortgage

An underwater mortgage is also known as negative equity or an upside-down mortgage. It often occurs when a homeowner purchases a property at a high price with a mortgage loan, but the value of the property declines over time, leaving the homeowner with a mortgage balance that exceeds the current value of the property. This can make it difficult to sell the property or refinance the mortgage.

Unit Trust

A unit trust, is a type of investment vehicle that pools money from individual investors to purchase a portfolio of stocks, bonds, or other securities. Each investor owns a proportionate share of the assets in the trust, represented by units or shares. The trust is managed by a professional fund manager who makes investment decisions on behalf of the investors. The income and gains generated by the investments are distributed among the unit holders in proportion to their holdings. Unit trusts are a popular form of investment for retail investors due to their diversification, professional management, and liquidity.

Unsecured Loan

An unsecured loan is a type of loan that does not require collateral or a security deposit. The lender provides funds based solely on the borrower’s creditworthiness and ability to repay the loan. Examples of unsecured loans include personal loans, credit cards, and student loans.

Vacancy Rate

Vacancy rate is commonly used in the real estate industry to evaluate the health of a rental market. It is calculated by dividing the number of vacant units by the total number of units in a given area or property. A high vacancy rate indicates an oversupply of rental units, which could drive down rent prices, while a low vacancy rate indicates a strong demand for rental units, which could drive up rent prices.

Waiver

A waiver is a voluntary relinquishment or surrender of a known legal right or privilege. It is an intentional act of giving up a right, claim, or privilege that is available to a party under a contract, law, or legal process. The waiver can be expressed in writing or verbally, and it usually requires the parties’ mutual consent. Once a waiver is given, the party who gave it cannot take back the action or claim the right that was waived. Waivers are common in various areas of law, including contract law, tort law, and criminal law.

Wear and Tear

Wear and tear refers to the normal depreciation of a property or asset over time as a result of regular use and ageing. It is a common concept in property management and maintenance, as landlords and property owners need to account for the wear and tear of their properties when budgeting for repairs and replacements.

Yield

Yield is a measure of the income generated by an investment, usually expressed as a percentage of the investment’s value. In the context of real estate, yield typically refers to the annual income generated by a property as a percentage of its value. This can be calculated by dividing the property’s annual net income (rental income minus expenses) by its market value. Yield can also refer to the return on investment (ROI) for a particular asset or portfolio, taking into account both income and capital gains or losses.

Zoning

Zoning refers to the regulation of land use by a local government or council, which defines how a particular area of land can be used, including what types of buildings can be constructed, how they can be used, and what activities are allowed on the property. Zoning is typically based on factors such as the location of the property, the type of surrounding land use, and the density of development in the area. It is designed to ensure that land is used in ways that are compatible with the surrounding environment and the needs of the community.

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