GLOSSARY

Sales and Investment Terms

Appraiser
One who is trained and educated in the methods of determining the value of property through analysis of various factors such as the market cost.

Capitalization
Determining a present value of income property by taking the annual net income and discounting by using a rate of return commonly acceptable to buyers of similar properties.

Cash Flow
In investment property, the actual cash the investor will receive after deduction of operating expenses and debt service from his/her gross income.

Contingency
Commonly, the dependence upon a stated event which must occur before a contract is binding.

Down Payment
Cash portion paid by a buyer from his/her own funds, as opposed to that portion of the purchase price which is financed.

Earnest Money
Money given by the buyer with an offer to purchase. A show of good faith.

Environmental
A report used by lenders and purchasers to determine any hazardous substances or environmentally unsafe uses which may have contaminated a specific property.

Lien
An encumbrance against property for money, either voluntary or involuntary.

Loan to Value Ratio
The relationship between the amount of a loan and the appraised value of a property. It is expressed as a percentage of the appraised value.

Net Operating Income
The difference between the effective gross income of a property, and the operating expenses.

Return On Investment
The profit from invested capital.

Zoning
The division of a city or county by legislative regulations into areas (zones), specifying the uses allowable for the real property in these areas.

Leasing Terms

CAM/Pass Throughs
Common area maintenance or any other property operating expenses an owner passes through to the tenant.

Gross
Total rental amount a tenant is to pay including taxes and operating expenses of the property.

Lease-Purchase
A lease under which the lessee has the right to purchase the property. The price and terms of the purchase must be set forth for the option to be valid. The option may run for the length of the lease or only for a portion of the lease period.

Lessee
The party to whom a lease (the right to possession) is given in return for a consideration (rent).

Lessor
The party (usually the owner) who gives the lease (right to possession) in return for a consideration (rent).

Modified Gross
A type of gross lease which establishes a tax base year and forwards an owners tax bill increase to its tenants based upon it's prorata share of space occupied.

Net
A lease requiring the tenant to pay in addition to a fixed rental a portion of the expenses of the property such as taxes, insurance, maintenance.

Percentage Lease
A lease generally associated with retail property, using a percentage of the gross or net sales to determine the rent.

Price per Square Foot
Represents a given value for rents in a specific area.

Term
The length of a lease.

Triple Net
A lease requiring the tenant to pay, in addition to a fixed rental, the expenses of the property leased, such as taxes, insurance, maintenance etc.