Real Estate Dictionary

real estate dictionary

1 Percent Rule: A rule of thumb used to determine if the monthly rent earned from a piece of investment property will exceed that property’s monthly mortgage payment.

50 Percent Rule: The 50 percent rule is one way to estimate what the expenses will be on rental properties. The 50 percent rule states that the expenses on a rental property will be 50 percent of the rents. The 50 percent rule does not account for any mortgage expenses.

70 Percent Rule: A common term used among many real estate investors when flipping houses. The 70 percent rule is a way to determine what price to pay for a fix and flip to make money the rule states that an investor should pay 70 percent of the ARV (after repair value) of a property minus the repairs needed.

 Rule 506 of Regulation D provides two distinct exemptions from registration for companies when they offer and sell securities. ... The company may sell its securities to an unlimited number of "accredited investors" and up to 35 other purchasers.

1031 Exchange: A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes.

Appraisal: Most lenders require an appraisal on homes to confirm they are worth what the buyer is paying. The appraisal is conducted by a licensed appraiser.

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