Property Terminology Part Three
New investors to the property market can often be put off by the overly confusing terminology that's carelessly bounced around. To help you make better sense of these confusing terms we've put together our guide to property terminology. You can find the first two parts of the series here and here.
Floor Loan
When a developer begins a construction project it's rare that a bank will lend the whole amount of money needed at the very start of the project. A floor loan is the minimum amount that a lender provides at the start of a project. The rest of the capital is usually provided when certain milestones are met. For example 75% of the money required to build a block of flats will be lent at the very beginning of the project with the remaining 25% delivered when a certain amount of the flats have been sold.
Floor loans are only applicable to commercial developments.
Grantee
A grantee is the recipient of money for a speci?c purpose. In real estate terms it refers to someone or a group of people who receive a property. Legally it refers to the person who is described in the legal documents as the new owner of the property.
125% Loan
A 125% loan is usually lent as a mortgage where the total value of the loan is worth 125% of the value of the property. Borrowers who take 125% loans usually use the extra 25% of the loan to spend on interiors and furnishings for their new property. As there is extra risk for the lender, the borrower usually has to pay a higher amount of interest.
A Bird Dog
A bird dog refers to someone who constantly looks for properties that are reduced in value usually due to their bad condition or damage. These types of investors often buy properties, make the necessary improvements and then rent them to tenants to generate a regular income.
Alligator Property
An alligator property is a property where the costs like mortgage repayments, maintenance and taxes are greater than the monthly income it brings in. If the owner of the property can't resolve the situation they could lose signi?cant amounts of money over time.
Gift of Equity
A gift of equity is where a property is sold to a friend or family member for a price below the market value. The difference between the price of the property and the market value of the property is known as a gift of equity.
Debris Removal Insurance
Debris removal insurance is insurance that covers clean up costs in the event of an accident. Usually, debris removal insurance will only cover an asset that is already insured. For example DRI will cover the costs of removing burnt wood from a house that was already insured.
Property Terminology - Part Three
New investors to the property market can often be put off by the overly confusing terminology that's carelessly bounced around. To help you make better sense of these confusing terms we've put together our guide to property terminology. You can also read Part 1 and Part 2 of our property terminology guides.
Floor Loan
When a developer begins a construction project it's rare that a bank will lend the whole amount of money needed at the very start of the project. A floor loan is the minimum amount that a lender provides at the start of a project. The rest of the capital is usually provided when certain milestones are met. For example 75% of the money required to build a block of flats will be lent at the very beginning of the project with the remaining 25% delivered when a certain amount of the flats have been sold.
Floor loans are only applicable to commercial developments.
Grantee
A grantee is the recipient of money for a specific purpose. In real estate terms it refers to someone or a group of people who receive a property. Legally it refers to the person who is described in the legal documents as the new owner of the property.
125% Loan
A 125% loan is usually lent as a mortgage where the total value of the loan is worth 125% of the value of the property. Borrowers who take 125% loans usually use the extra 25% of the loan to spend on interiors and furnishings for their new property. As there is extra risk for the lender, the borrower usually has to pay a higher amount of interest.
A Bird Dog
A bird dog refers to someone who constantly looks for properties that are reduced in value usually due to their bad condition or damage. These types of investors often buy properties, make the necessary improvements and then rent them to tenants to generate a regular income.
Alligator Property
An alligator property is a property where the costs like mortgage repayments, maintenance and taxes are greater than the monthly income it brings in. If the owner of the property can't resolve the situation they could lose significant amounts of money over time.
Gift of Equity
A gift of equity is where a property is sold to a friend or family member for a price below the market value. The difference between the price of the property and the market value of the property is known as a gift of equity.
Debris Removal Insurance
Debris removal insurance is insurance that covers clean up costs in the event of an accident. Usually, debris removal insurance will only cover an asset that is already insured. For example DRI will cover the costs of removing burnt wood from a house that was already insured.
Related Articles
Property Terminology Part 1
Property Terminology Part 2
Guide to Property Investment in the USA