Property Management Terms to Understand

Real Estate Terms: Renting

Vacancy rate: The percentage of unoccupied units (not generating income) in a rental property portfolio at any given time

Tenant screening: The process of interviewing, conducting background and credit checks, calling references, and fully vetting applicants to find the best possible tenant

Liability insurance: A type of insurance policy that protects property owners against claims of negligence or action that results in bodily injury or property damage to another party

Rental property: Investment property from which an owner receives monthly payments from tenants for living there

Short-term rental: A type of rental property only leased for a short period of time, usually for vacationers, that comes furnished; property owners commonly use online marketplace services like Airbnb and VBRO to find renters

Long-term rental: The traditional type of rental property where tenant sign a lease for a longer period of time (1+ years)

Rental income: Income generated from rent payments the tenants make to the landlord for living on the landlord’s property

Rental property calculator: Often used to evaluate if a property is a good investment prior to buying, a rental property calculator is an online tool that allows owners to plug in associated costs of their investment property to predict the ROI, cash flow, and IRR

All Property Management Rental Property Calculator

Single-family home: A free-standing residential property not attached to any other residential or commercial properties

Multi-family home: A residential property designed to house many different tenants (or groups of tenants) in separate units within a single structure

Mixed-use building: A property zoned for both commercial and residential use (e.g. a multi-family home where the ground floor is a convenience store)

Leasing fee: The fee a property owner pays to a property manager when the property manager signs a tenant for the rental unit; when a tenant renews their lease, the property owner pays a re-leasing fee to the property manager

Vacancy provision: A sum of money set aside to help cover expenses in the event a rental unit is vacant for a period of time (typically 12% of the rent to allow 6% to cover vacancy and 6% to cover maintenance)

Fair Housing Act (FHA): Federal law that prohibits real estate agents, landlords, sellers, lenders, and any other party that has influence in the decision-making process of buying, selling, renting, and financing of housing from discrimination against individuals in a protected class based on race, nationality, gender, religion, family status, and disability

The Importance of Understanding the Lingo

Property investing can come with a hefty price tag. But if you do it right, you can be making a good amount of passive income from rent while letting the property appreciate. That is why it’s essential to understand the key terms of real estate investing. When you can navigate the market with confidence, you will be on track to excelling as an owner and investor.