Real estate investing glossary

Real estate investing glossary.

1. Foreclosure sale = The public sale of a piece of property following repossession by the lending institution which secured the note on that property

2. Rental Property = These are living units that you own and let someone else live in and pay the mortgage (or part of it) as their monthly rent.

3. Rent to own homes = This situation is where you basically rent a house from an owner and make extra payments for an agreed upon time so that after that time period, the house will now change ownership from your landlord to you. All payments are credited toward the purchase price of the house.

4. Lease Option = This is similar to rent-to-own situations. You agree to lease a property for a specified time frame. You also agree to pay an additional sum of money called "option" money. This allows you the right to buy the property at the end of the time frame. The option money is usually not refundable and usually does not get credited to the purchase price of the property. The option money serves to lock in the right for the person leasing from the owner to purchase the house.

5. Land contract = Another form of lease option in which owner allows an interested party to utilize their property for a specific period of time. If full and timely payments are made during that time frame, the owner transfers title to the party that made payments.

6. Purchase Agreement = Initially, an offer buy an interested party to purchase a piece of property from a seller. Later, once the offer is accepted by the seller, this agreement will become the official contract leading to the transfer of the property from seller to the buyer.

7. REO's = "Real Estate Owned" are houses owned by the bank because the bank had to repossess the house from the owners due to failure to pay the mortgage.

8. Rental Agreement = The agreement between a landlord and tenant establishing property to be rented, date and length of agreement, monies to be paid and when, responsibilities of each party, and other relevant and pertinent information.