Glossary

Appreciation

Appreciation refers to the increase in the value of a property over time. Appreciation can be caused by a number of things including inflation, the increase in demand or a decrease in supply of properties. Appreciation can also take into account added value as a result of property improvements (such as upgrading a kitchen, adding a room or a pool, etc.). Appreciation is usually projected as a percentage of the property’s value over the course of a year.

Blue Chip Stocks

Stocks from large, concretely established, financially stable companies that are considered to be able to provide reliable dividends.

Bond

A debt investment where money is loaned (often to a corporation or government) for a specific amount of time with an agreed upon fixed interest rate. Often used to raise money.

Dow Jones Industrial Average (DJIA)

It is the most popular and widely used measure of the U.S. Stock Market. It consists of a price-weighted list of 30 highly-traded Blue Chip companies. The Dow is watched by investors as an indicator of the health and direction of the stock market.

Driving for Dollars

A term real estate investors use to describe driving around residential neighborhoods looking for homes that are vacant or distressed which they’ll look to purchase under market value.

Exchange Traded Fund (ETF)

Exchange Traded Funds (ETFs) are funds that track indexes like the NASDAQ-100 Index, S&P 500, Dow Jones, etc. When you buy shares of an ETF, you are buying shares of a portfolio that tracks the yield and return of its native index. ETFs combine the range of a diversified portfolio with the simplicity of trading a single stock.

Mutual Fund

A mutual fund pools the assets of its investors and invests the money on behalf of those investors. The companies that issue these funds, such as Fidelity or Vanguard, manage the pool of money on the investors’ behalf. The underlying logic of mutual funds is that they provide diverse investments — in stocks, bonds and cash — without requiring investors to make separate purchases and trades. Another advantage is that investing in mutual funds saves time. You’ve essentially hired a professional investor to monitor your portfolio’s holdings and do his or her best to buy and sell at appropriate times.

Real Estate Owned (REO)

A Real Estate Owned or REO property is one owned by a lender, usually a bank. Lenders generally only take title of properties after a foreclosure. REO properties can often be purchased below market value making them a great interest to investors.

Stock

A stock represents ownership in a company. Companies divide their ownership stakes into shares, and the amount of shares you purchase indicates your level of ownership in the company. Stock is bought in the hopes that the company will be successful, and more people will want a stake, so you can sell your stake later at a higher price than you paid

Turn Key Property

A turnkey property is a property that has been purchased, rehabbed and rented to a tenant and is now for sale to another investor. Turnkey properties usually cash flow from the moment the investor purchases it since the property is already rented.