Glossary of Australian Property Investment Terms
Navigating the vast ocean of property investment and finance jargon can leave you feeling like you’re up a creek without a paddle – even for the most financially aware borrowers.
Lenders and brokers often try to dumb down their financial buzzwords, but in many instances, confusing financial terms are unavoidable.
To help you pick your way through mortgage and finance jargon we’ve compiled a glossary of terms that you may encounter along your path to investment property ownership.
So if you become confused along your journey, refer to any of the terms and phrases below.
An individual or corporation that owns a particular property without actually occupying it or actively managing it.
Abstract of Title
The summarized history of all the titles, transfers and legal actions that are connected to a property.
An individual who has the knowledge and expertise necessary to estimate the value of a property.
A legal document of property ownership that does not grant ownership to its holder due to unsatisfied legal or financial problems.
A type of lending arrangement that doesn’t fully amortize (payout in full) over the life of the loan so that a lump sum balance remains at the end of the loan period that must still be paid.
Properties that are taken into a bank’s inventory. Property that is acquired by a financial institution when a homeowner is unable to make mortgage payments.
Best and Final Offer
In bidding or negotiations, a prospective buyer’s last and highest offer to purchase a property.
Sometimes also called Greenfield Land; it is undeveloped land that has been identified for residential development.
The public register of land boundaries that defines separate holdings of land.
An addition of a permanent structural change or the restoration of some aspect of a property to increase the property’s overall value.
The geographic region serviced by a particular centralised service or function, such as Emergency Services.
The acronym for Central Business District – it is the main business and commercial area of a town or city.
Certificate of Title
A document that identifies the legal owner (or owners) of a property.
Commercial Real Estate
Property that is used exclusively for business purposes ad may not be used as residential or living space.
Sometimes also called State Land; it is the land that is owned and managed by government for the benefit of the community.
The process of arranging a new loan for the purpose of combining multiple debts into a single larger debt to be paid off.
Something or someone that fails to accomplish what is required by law, such as the failure to make a required payment against a loan in a timely manner.
The scientific and statistical study of populations; in particular their size, development and structure.
When a property is sold urgently due to the owner being affected by unfavourable circumstances.
A structure or building in which people live.
Income-producing investments that have a base value and the ability to produce additional funds beyond this inherent value.
Violation of a neighbouring property owners rights by building on or extending a structure on to their land or property.
An individual or organisation that holds property in trust while a transaction is finalised or a dispute is resolved.
The process by which a landlord may legally remove a tenant from their rental property.
Fair Market Value
The most probable price a property would sell for on the open market in an arm’s-length transaction between two willing parties.
The purchasing of an asset (such as real estate) with the intent of selling it for a quick profit rather than holding on for long-term appreciation.
The legal action of taking possession of a mortgaged property by the financial institution when the mortgagor (borrower) fails to keep up their mortgage payments.
A purchasing arrangement method in which several unrelated parties can share in and mitigate the risk of ownership of a high-value tangible asset.
The process of renovating and improving a city urban environment to transform it from being a poor area into a more affluent locale.
An agreed period nominated within a contract that allows payment to be received at any time within a certain period of time after the actual due date.
Sometimes called Gross Income; is the total income earned by an individual before tax, deductions and accounting adjustments.
A renter who remains in a property after the lease has expired.
The portion of a home’s current value that the owner actually possesses free and clear, without obligation to a lending institution or lien.
A calculation that determines whether property prices are in a range that low to moderate income households can afford to pay and still be able to meet other basic living costs.
New residential development that occurs on small sites in established suburbs and produces less than ten new dwellings.
A tax minimisation strategy used to fictionally allocate earned income of one spouse to another with the aim of reducing tax rates on assessable income.
Sometimes called Purchasing Power Risk; it is the uncertainty over the future real value of an investment due to changes that reduce the investment’s worth.
Investment Real Estate
Property that generates income or is otherwise intended for investment purposes rather than as a primary residence.
A legal arrangement in which two or more people own a property together, sharing equal rights and obligations.
It is the uncertainty over a bank or financial institution’s exposure due to their participation in high-risk areas or regions (for example, money laundering or terrorism).
A metric to evaluate the appreciation of wealth and the consistency of that wealth creation.
A payment to a recipient as compensation or as a reward for providing favourable treatment or services.
The financial value (worth) of a property including all improvements or upgrades and excluding any buildings.
A change made ot a rental property to customise it for the specific needs of a tenant.
Lenders Mortgage Insurance
An insurance policy that protects a lender or title holder against losses that may be caused by default (failure to pay) of a mortgage loan by a borrower.
A lenders claim against a property belonging to another person, that prevents the sale of that property until a debt owed is paid.
Land that has undesirable characteristics with little or no potential for profit, appreciation or value improvement.
An alternative dispute resolution method that allows parties to negotiate a settlement without going to trial.
Medium Density Housing
More than one dwelling on an ordinary house block, including any form of attached housing such as townhouses or apartments.
A periodic tenancy in which the tenant rents from the property owner one month at a time.
A number that reports how often deaths occur in a particular population.
A type of loan account setup where the borrowers’ income is directly deposited into the mortgage account to pay down the mortgage faster.
An entity (such as a bank or financial institution) that lends money to a borrower to buy property.
A situation that occurs when the value of a property falls below the outstanding balance of the mortgage for that property.
A form of financial benefit that is created when investing borrrowed money in an asset that is unable to produce enough income to cover loan payments; resulting in a loss that can be claimed as a tax deduction.
A metric that financially defines what an entity (asset, business, individual) is worth.
To take the position of being closed off to discussion or modification; the thing is firmly established and cannot be adjusted.
A type of lending arrangement offered by financial institutions where the borrower maintains a savings account with the lender and interest earned on the savings contribute towards loan repayments.
A scheduled time when a property is arranged to be available for viewing by potential buyers.
A property that is used as a dwelling by the property owner.
A shared wall that separates two adjoining separately rented or owned properties.
Your main residence (your home) and the property where you and your family live, your belongings are held, your mail is delivered and your known electoral roll address.
When a property is advertised for sale and the sale price is negotiated between the seller and prospective buyer.
An individual or organisation retained to oversee the day-to-day operations of a unit of real estate for a fee.
An individual with professional accreditation and experience in valuing assets (including property).
The minimum number of individuals with vested interest that must be present to make the proceedings of a meeting valid.
A promise or commitment from a seller to a buyer that an item currently unavailable can be purchased at a later date for the current day’s sale price.
Real Estate Investment Group
An organisation that builds or buys properties and then sells them to investors as rental properties.
The right to reclaim property in the event of non-payment, fraud or other irregularities.
Any payment for monies owed that occurs on a continuing basis and cannot be easily cancelled, such as loan payments.
A register of a landlord’s property with the rents, names of tenants and amounts due; it documents the total income and is considered a trade-able asset.
A bank account in which to set aside money for anticipated expenditures and other future financial costs for maintaining a property.
A transaction where banks in financial difficulties are able to sell their risky ventures to other financial institutions.
Sealed Bid Auction
A type of auction process in which all bidders simultaneously submit secret bids to the auctioneer, so that no bidder knows how much the other participants have bid.
A sum of money given to another party intended as proof of intention in a transaction.
A person who settles in or occupies a property with no legal claim (no title, right or lease) to the property.
Renting part or all of a property by a tenant to a third party.
The examining and recording of area and features of a particular piece of land so that a map, plan or detailed description of it can be captured.
A type of transaction that reduces a person’s tax liability by lowering their calculated taxable income.
A transaction or income that is free from taxation and therefore excluded from calculation on tax obligations.
Any sort of multi-occupancy rental property.
A search of public records to determine or confirm a property’s legal owner and discover what claims exist for a property.
A type of multi-year lease in which the lessor gives the lessee exclusive rights to use and possess property for a monthly fee over a specified period.
A situation that occurs when the balance of a mortgage loan is higher than the fair market value of the property.
A financial structure that enables a form of collective investment; pooling investor money and assets into a single fund.
A loan that is issued and supported only by the borrower’s creditworthiness or credit score, rather than by any type of asset.
A calculated statistic for reporting on the percentage of all available property that is vacant or unoccupied for a specific period of time.
A foreclosure initiated by a borrower unable to continue making loan payments on a property.
The voluntary withdrawal of your own contractual rights in an agreement.
Wear and Tear
Damage that naturally and inevitably occurs as a result of use and ageing
The cashflow earnings generated by an investment over a particular period of time.
A long forgotten about debt that is usually written off as uncollectible.
The council or local government laws that specifies how privately-owned urban property can or cannot be used in certain areas