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texas real estate glossary

Texas Homes & Real Estate Glossary R
From REIT, Real Property, Real Estate Agent to Rescission

Return to the Real Estate Glossary

REIT (Real Estate Investment Trust) - A business corporation formed as a trust that combines the investors' capital to purchase or provide financing for real estate. A trust that qualifies for REIT status generally does not pay Federal corporate income tax. Instead, it pays out at least 90 percent of its taxable income as dividends.

Radon - A radioactive gas found in some homes that can cause health problems if it occurs in strong enough concentrations.

Raw land - Unimproved land in its natural state, with no man-made improvements such as utilities, roads and drainage.

Raw space - Shell space in a building without any improvements.

Real estate agent - A person who is licensed to negotiate and arrange real estate sales and works with or for a real estate broker.

REALTOR - A real estate agent or broker who is a member of the National Association of REALTORS and its local or state associations.

Real estate fundamentals - The factors driving the value of real property, such as supply, demand and pricing for land or developed space in a given geographic region or economic market.

Real property - Land and whatever is affixed to the land that would be personal property if not attached, such as buildings. Federal banking regulations governing appraisals define real property as an identified parcel or tract of land including improvements, easements, rights of way, undivided or future interests, and similar rights but excluding mineral rights, timber rights, or growing crops.

Real rate of return - Yield to investors less a factoring for inflation. The formula for calculating the real rate of return is [(1 + nominal yield) divided by (1 + inflation rate)] minus 1.

Recording - Any legal document that affects the ownership of real property is recorded in public records at the county’s recorder office. This gives official, public notice of property ownership.

Regional diversification - The diversification of investments along predefined lines such as a geographic or economic region. Definitions for the various regions vary among managers, consultants and plan sponsors.

Rehab - Extensive renovation intended to cure obsolete or out of fashion parts of a building or project.

Renewal option - A lease agreement clause giving a tenant the right to extend the term of a lease.

Rent - Monetary compensation or fee paid to an owner, lessee or landlord for the right to occupy and use of any real or private property such as rental property, land, buildings, and equipment.

Rent Step-Up - A lease agreement where the rent increases at a predetermined rental period, usually annually, for a fixed amount of time or for the life of the lease.

Rental concession - What landlords offer tenants in return for the tenants' agreement to lease. Examples of rental concessions are: rental abatement, below-market rental rates, increase in the tenant improvement allowance, signage, and moving allowances.

Rental growth rate - Expected pattern in market rental rates over the period of analysis, expressed as a yearly percentage increase or decrease.

Rental Income Expenses - A commercial income property's actual or projected expenses expressed as a percentage and an amount. Expenses include: management fees, insurance, rental vacancy factor, replacement and reserve expenses, and ongoing operating expenses such as water, gas, licenses, waste, and property taxes.

Rent-up period - The period during and following the building of a new structure when tenants are actively being sought to when the project approaches full occupancy.

Repayment plan - An agreement between a lender and a borrower who is delinquent on their mortgage payments, in which the borrower agrees to make additional payments to pay down past due amounts while still making regularly scheduled payments.

Replacement cost - The estimated current cost, using modern materials and current standards, design and layout, to construct a building with equivalent use as the building under appraisal.

Replacement reserves - A reserve account or allowance that provides funds for the periodic replacement of a structure's components, such as HVAC, parking lot, carpets, and roof, which wear out more rapidly than the structure itself and need to be replaced during the building's economic life.

Request for proposal (RFP) - A formal request, sent by a plan sponsor or its consultant, inviting investment managers to submit data on their firm's investment strategy, historical investment performance, current investment opportunities, management fees, and other pension fund client relationships. Firms that meet the plan qualifications are requested to make a formal presentation to the board of trustees and senior staff members. At the completion of this process, finalists are chosen and contract negotiations are begun.

Rescission - Cancellation of a contract or a transaction. A rescission can occur if the buyer elects to make the transaction invalid or when a law or technicality makes the transaction void.

Reserve account - An account, such as a capital expenditure account or a deferred maintenance account, that a borrower funds to protect the lender.

Return on assets - The percentage calculated by dividing the average total assets by the income after taxes for the trailing 12 months.

Return on equity - The percentage calculated by dividing the average common equity by the income available to common stockholders for the trailing 12 months.

Return on investments - The percentage calculated by dividing the average total long-term debt, other long-term liabilities and shareholders equity by the income after taxes for the trailing 12 months.

Risk management - A systematic way to identify and separate insurable risks from non-insurable risks, and evaluating the availability and costs of covering those risks with third-party insurance.

Risk-adjusted rate of return - Used to identify investment alternatives that, after considering their expected volatility, are likely to deliver a positive premium. The expected rate of return of a given asset, minus the expected return for Treasury bills, divided by the expected standard deviation of the returns for the assets.

Roll-over risk - Risk that a tenant's lease may not be renewed.


Dale E. Cook, MBA, Broker/Owner

Sage - Premium Texas Real Estate
405 N. Llano St.
Fredericksburg, TX 78624

830-997-1035 office
830-992-0056 cell

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