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Radon
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A radioactive gas found in some homes that, if occurring in strong enough concentrations, can cause health problems.
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Rate cap
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The maximum interest rate allowed on the monthly payment of an adjustable rate mortgage during an adjustment period.
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Rate lock
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A lender's commitment to a borrower to guarantee (or "lock in") a specific interest rate for a limited amount of time.
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Rate-improvement mortgage
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A loan with a clause that entitles a borrower to a one-time interest rate cut without going through refinancing.
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Rating
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Grade, assigned by a rating agency, designating the credit quality or creditworthiness of the underlying assets
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Rating agencies
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Independent firms engaged to rate the creditworthiness of securities for the benefit of investors. The major rating agencies are Fitch Ratings, Standard & Poor's and Moody's Investors Service.
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Raw land
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Unimproved land that remains in its natural state
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Raw space
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Unimproved shell space in a building
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Real estate agent
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An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.
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Real estate fundamentals
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The factors driving the value of real property (i.e., the supply, demand and pricing for land and/or developed space in a given geographic or economic region or market)
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Real property
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Land, and generally whatever is erected or affixed to the land that would be personal property if not attached
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Real rate of return
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Yield to investors net of an inflationary factor. The formula for calculating the real rate of return is [(1 + nominal yield) / (1 + inflation rate)] - 1.
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Realtor
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A real estate agent or broker who is a member of the NATIONAL ASSOCIATION OF REALTORS®, and its local and state associations.
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Recapture
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When the IRS recovers the tax benefit of a deduction or a credit previously taken by a taxpayer, which is often a factor in foreclosure because there is a forgiveness of debt. As used in leases, it is a clause giving the lessor a percentage of profits above a fixed amount of rent; or in a percentage lease, a clause granting the landlord the right to terminate the lease if the tenant fails to realize minimum sales.
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Recessed Lighting
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This term refers to lighting that is located above the ceiling and does not have alight fixture hanging from the ceilings. This type of lighting provides a very clean and contemporary look to an apartment.
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Recording fee
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A fee charged by real estate agents for conveying the sale of a piece of property into the public record.
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Recourse
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The right of a lender, in the event of default by the borrower, to recover against the personal assets of a party who is secondarily liable for the debt
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Red herring
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The preliminary prospectus for an initial public offering. Before the registration statement becomes effective, underwriters may use the preliminary prospectus to market the offering. The preliminary prospectus, however, must bear a legend printed in red ink stating that the offering has been filed but is not yet effective.
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Refinancing
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Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (such as a lower interest rate).
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Refinancing
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The process of replacing an older mortgage with a new mortgage.
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Regional diversification
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Definitions for what constitute various regions, for diversification purposes, vary among managers, consultants and plan sponsors. Some boundaries are defined based purely on geography; others have attempted to define boundaries along economic lines.
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Registration statement
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Forms filed with the Securities and Exchange Commission (or the appropriate state regulatory agency) in connection with a proposed offering of new securities or the listing of outstanding securities on a national exchange
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Regulation Z
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A federal code issued under the Truth in Lending Act that requires a borrower be advised in writing of all costs associated with the credit portion of a financial transaction.
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Rehab
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Extensive renovation intended to cure obsolescence of a building or project
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Rehabilitation mortgage
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a mortgage that covers the costs of rehabilitating (repairing or improving) a property; some rehabilitation mortgages such as the FHA's 203(k) allow a borrower to roll the costs of rehabilitation and home purchase into one mortgage loan.
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Rehabilitation mortgage
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A mortgage that provides for the costs of repairing and improving a resale home or building.
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REIT (Real estate investment trust)
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A business trust or corporation that combines the capital of many investors to acquire or provide financing for real estate. A corporation or trust that qualifies for REIT status generally does not pay corporate income tax to the IRS. Instead, it pays out at least 90 percent of its taxable income in the form of dividends.
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Remaining balance
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The amount of unpaid principal on a home loan.
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Remaining term
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The original loan term minus the number of payments made.
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REMIC (Real estate mortgage investment conduit)
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A product of the Tax Reform Act of 1986, REMICs are designed to hold a pool of mortgages for the exclusive purpose of issuing multiple classes of mortgage-backed securities in a way that avoids a corporate double tax.
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Renewal option
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A clause giving a tenant the right to extend the term of a lease
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Renewal probability
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Used to estimate leasing-related costs and downtime, it is the average percentage of tenants in a building that are expected to renew at market rental rates upon the expiration of their leases.
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Rent
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Compensation or fee paid for the occupancy and use of any rental property, land, buildings, equipment, etc.
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Rent commencement date
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The date on which a tenant begins paying rent
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Rentable/usable ratio
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A building's total rentable area divided by its usable area. It represents the tenant's pro-rata share of the building's common areas and can determine the square footage upon which the tenant will pay rent. The inverse describes the proportion of space that an occupant can expect to actually use.
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Rental Building
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These buildings are owned by an individual or a company and the apartments are available on a rental basis only.
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Rental Commission
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A broker earns a rental commission on the rental of an apartment. The prospective tenant typically pays this commission which can range from ten to fifteen percent of a year's aggregate rent. In a hot rental market, these fees will tend to be in the neighborhood of fifteen percent. In a soft market, one may induce a real estate agent to reduce his/her fee in order to conclude a transaction.
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Rental concession
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What landlords offer tenants to secure their tenancy. While rental abatement is one form of a concession, there are many others such as increased tenant improvement allowance, signage, below-market rental rates and moving allowances.
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Rental growth rate
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The expected trend in market rental rates over the period of analysis, expressed as an annual percentage increase
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Rental Sublet
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When a tenant in a rental building decides that he/she must rent out their apartment for a short period of time because they are leaving New York, they have an opportunity to assign their lease to another tenant for the period of time that they will be out of town. These types of sublets are usually furnished and last for less than a year in duration.
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Rent-up period
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The period following construction of a new building when tenants are actively being sought and the project is approaching its stabilized occupancy
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REO (Real estate owned)
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Real estate owned by a savings institution as a result of default by borrowers and subsequent foreclosure by the institution
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Replacement cost
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The estimated current cost to construct a building with utility equivalent to the building being appraised, using modern materials and current standards, design and layout
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Replacement reserves
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An allowance that provides for the periodic replacement of building components that wear out more rapidly than the building itself and must be replaced during the building's economic life
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Request for proposal (RFP)
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A formal request, issued by a plan sponsor or its consultant, inviting investment managers to submit information on their firms' investment strategy, historical investment performance, current investment opportunities, investment management fees, other pension fund client relationships, etc. Firms that meet the qualifications are requested to make a formal presentation to the board of trustees and senior staff members. Finalists are chosen at the completion of this process, and contract negotiation begins.
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Rescission
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The cancellation of a contract by law or consent from the parties involved.
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Reserve account
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An account that a borrower has to fund to protect the lender. Examples include capital expenditure accounts and deferred maintenance accounts.
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Reserve Fund
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Each co-operative and condominium maintains a reserve fund. The objective of the board of directors or the board of managers is to grow this reserve fund so that the building has the ability to pay for the monthly expenses involved in the upkeep of the building as well as for those expenses that are out of the ordinary (such as elevator, repairs, roof repairs, new boilers, etc.).
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Resolution Trust Corp. (RTC)
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The RTC was established by Congress in 1989 to contain, manage and sell failed savings institutions and recover taxpayer funds through the management and sale of the institutions' assets.
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RESPA
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Real Estate Settlement Procedures Act; a law protecting consumers from abuses during the residential real estate purchase and loan process by requiring lenders to disclose all settlement costs, practices, and relationships
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Retail investor
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When used to describe an investor, retail refers to the nature of the distribution channel and the market for the services - selling interests directly to consumers.
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Retention rate
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The percent of trailing 12-month earnings that have been ploughed back into the company. It is calculated as 100 minus the trailing 12-month payout ratio.
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Return on assets
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The income after taxes for the trailing 12 months divided by the average total assets, expressed as a percentage
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Return on equity
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The income available to common stockholders for the trailing 12 months divided by the average common equity, expressed as a percentage
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Return on investments
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The trailing 12-month income after taxes divided by the average total long-term debt, other long-term liabilities and shareholders equity, expressed as a percentage
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Reverse mortgage
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A special type of loan available to equity-rich, older home owners. Repayment is not necessary until the borrower sells the property. Many downsides exist to these loans.
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Reversion capitalization rate
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The capitalization rate used to determine reversion value
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Reversion value
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A lump-sum benefit that an investor receives or expects to receive at the termination of an investment
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RevPAR (Revenue per available room)
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Total room revenue for the period divided by the average number of available rooms in a hospitality facility
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Right to rescission
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A provision in the federal Truth in Lending Act that allows borrowers to cancel certain kinds of loans within three (3) days of signing.
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Risk management
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A systematic approach to identifying and separating insurable risks from non-insurable risks, and evaluating the availability and costs of purchasing third-party insurance
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Risk-adjusted rate of return
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Used to identify investment alternatives that can be expected to deliver a positive premium, after taking into consideration the expected volatility. The risk-adjusted rate of return is defined as the expected rate of return of a given asset, less the expected return for T-bills, divided by the expected standard deviation of the returns for the assets.
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Road show
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A tour made by executives of a company that plans to go public, where they travel to various cities to meet with underwriters and analysts and make presentations regarding their company and IPO. The road show takes place during the marketing period before the registration statement becomes effective.
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Roll-over risk
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The risk that a tenant's lease will not be renewed
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Room Count
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Every apartment has a room count. Straight Studio, Petite Kitchen: One room. Straight Studio, Full Kitchen: Two rooms. Alcove Studio, Full Kitchen: 2.5 Rooms. Junior-One, Full Kitchen, No Wall: 2.5 Rooms. Junior-One, Full Kitchen, Wall: 3.0 Rooms. One Bedroom, Living Room, Kitchen: 3 Rooms. Junior-Four, Living Rooms, Kitchen, Dining Alcove: 3.5 Rooms. Convertible-2, Living Rooms, Kitchen, Dining Alcove, No Wall: 3.5 Rooms.
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