Cap Rate

Definition

Short for capitalization rate, it's a number that tells investors whether a property will make money or just slowly drain their soul and savings. The higher the cap rate, the better the return, unless you forgot to factor in literally anything else.

Example Usage

"My rental property has a 12% cap rate on paper. In reality, after the tenants, the plumber, and the raccoon in the attic, it's closer to negative infinity." - A landlord doing math

Related Terms

Intermediate

Fair Market Value

A completely made-up number that everyone pretends is scientific because an appraiser with a clipboard said so. It's "fair" the same way a casino is "fair" -- technically accurate but someone always feels robbed.

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Intermediate

holdover tenant

A tenant who remains in possession of property after their lease expires without the landlord's permission. The houseguest who won't leave, except they're paying (or supposed to be paying) rent.

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Intermediate

segregation

The practice of separating people or things, which can range from voluntary self-sorting to legally enforced discrimination that stains history books. In genetics, it's the boring-but-important Mendelian process where parent organisms pass only one allele to offspring. Real estate agents know it as that uncomfortable topic from the industry's shameful past that fair housing laws were created to combat.

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Intermediate

punch list

A final list of minor repairs or incomplete items that need addressing before closing on new construction. It's proof that even 'move-in ready' is aspirational.

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Beginner

homeowner

Someone who has traded the freedom of renting for the privilege of paying property taxes, fixing broken toilets at 2 AM, and obsessing over lawn care. Technically owns a house, but in reality, is owned by a mortgage, maintenance costs, and the HOA. The American Dream™ in human form.

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Beginner

comparables

Recently sold properties used to determine market value, cherry-picked by whichever party needs to prove their point. The art of comparing apples to slightly different apples.

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