Property Jargon Explained...
So you've finally decided to invest in property and you either reach out to a local property expert, or you start attending your local networking events. And quite quickly you realise everyone is speaking a different language from you. That's because in property there's a whole different language, from abbreviations, jargons to sayings you would just never hear in your national day-to-day life.
This articale can hopefully break down some of these barriers, and give you some of the meanings behind the jargon. This should then hopefully allow you to have a better conversation at either networking events, or when you're speaking to your local property expert.
1. BMV - Below market value, the most used term in property investment circles. What does it mean? It simply means that you're buying the property below it's current market value.
2. Refurb, or a refurbishment - which means some work carried out to the property. It can be a full refurb, which just means wiring, boiler, kitchen, bathroom, the full house if you like, or a light refurb, that could be painting, decorating some touch-ups to the property.
3. Vendor - also known as the person that is selling the property.
4. The Title - this means who has legal ownership of the property.
5.The Tenant - which basically means the person who is going to live in your property.
6.The Surveyor - The surveyor will come out and check the property over for general wear and tear, any issues with the property, and report back on the home report.
7. The Solicitor - This is the legal professional who either looks after the buyer, or the seller. It's their job to ensure that everything from a legal perspective is done.
8. BTL - Buy to let. This is simply a mortgage product with the sole purpose in mind to rent out your property to tenants.
9. Conveyancing - Conveyancing is just the legal process of either buying or selling a property.
10. DIP - Decision in principle. This is purely a mortgage company giving you the green light prior to you purchasing a property for a certain amount. They're basically saying to you we will give you X amount of money once you find a property. This allows you to source properties and offer on properties with the mortgage in principal.
11. HMO - House of multiple occupancy. Really straight forward, four bedrooms, you rent the four rooms out to four different people. High yielding property, a lot of rules and regulations around it.
12. Serviced Accommodation - In a word, Airbnb. So you rent out your house for one night, two nights, three nights. Again, high yielding strategy comes with some rules and regulations.
13. Yield - You've either got gross yield, or net yield. Yield basically means the percentage return on investment on a yearly basis. Gross is the grand total and Net is minus all deductions.
14. ROI - Return on investment. This is purely a percentage of what you invested to what you get back out of the deal.
So that's it, some of the most commonly used terms in the property investment world. Hopefully that's gave you a little insight into the language that's used in this world. If you do want to find out some more, simply drop me a comment. As you can imagine there's so much more out there, a lot more in-depth answers into some of the words I've used here and some of the terms. If you do want to find out more simply drop me a little message and I'll be happy to explain.
Steven