Glossary

Property management terms, explained.

210 terms defined in plain language by the people who use them daily. No jargon translations. No fluff.

1 A B C D E F G H I J K L M N O P Q R S T U V W

1

A tax strategy that lets you sell a rental property and defer capital gains taxes by reinvesting the proceeds into anoth...

A

Accounts Receivable

Money owed to the property owner that has not been collected yet. Unpaid rent, outstanding late fees, utility reimbursem...

The increase in a property's value over time. Memphis historically appreciates 3-5% annually, though it varies significa...

The process of paying off a mortgage through scheduled payments over time. Each payment splits between principal and int...

When a tenant leaves the property without notice and stops paying rent. Tennessee law requires the landlord to make reas...

Asbestos Disclosure

The obligation to inform tenants about known asbestos-containing materials in the property. Common in properties built b...

A year-end summary of property performance. Total income, total expenses by category, net income, capital improvements m...

Application Fee

The non-refundable fee a tenant pays to apply for a rental. Covers the cost of credit check, background check, and proce...

Accredited Investor

An individual with a net worth over $1 million (excluding primary residence) or annual income over $200,000 ($300,000 jo...

Appliance Repair

Fixing or replacing the appliances provided with the rental unit. Refrigerator, stove, dishwasher, washer/dryer, and gar...

Absorption Rate

The rate at which available rental units are leased in a specific market over a given period. If a Memphis neighborhood ...

B

Break-Even Ratio

Operating expenses plus debt service divided by gross operating income. This tells you what occupancy percentage you nee...

Background Check

A search of criminal records, sex offender registries, and sometimes terrorist watch lists as part of tenant screening. ...

An investment strategy where you purchase a rental property and hold it long-term for cash flow, equity buildup, and app...

Buy, Rehab, Rent, Refinance, Repeat. An investment strategy where you purchase a distressed property below market value,...

The set of regulations governing the design, construction, and maintenance of buildings. Memphis and Shelby County follo...

Rent and other charges that were billed but will never be collected. A tenant who skips out owing $3,000 and has no asse...

C

The annual return on a property if you paid all cash. Calculated as Net Operating Income divided by purchase price. A $1...

Cash-On-Cash Return

The annual pre-tax cash flow divided by total cash invested. Unlike cap rate, this accounts for your mortgage. If you pu...

Chart Of Accounts

The organized list of every income and expense category used in your property accounting. Rental income, management fees...

Capital Expenditure

A major expense that improves or extends the life of a property. New roof, HVAC replacement, kitchen remodel, new window...

The original purchase price of a property plus any capital improvements, minus accumulated depreciation. Your cost basis...

The fees paid when a property sale closes. Title insurance, attorney fees, recording fees, transfer taxes, lender origin...

The money left over after all income is collected and all expenses are paid, including the mortgage. Positive cash flow ...

Constructive Eviction

When a landlord's failure to maintain a property makes it uninhabitable, effectively forcing the tenant to move out. No ...

A review of a rental applicant's credit history and score. Reveals payment patterns, outstanding debts, collections, ban...

A comparison of your property to similar properties that are currently renting or recently rented in the same area. Good...

Court Appearance

Showing up in General Sessions Court for the eviction hearing. The landlord or their representative must be present with...

Class A Property

The highest quality rental properties in the best locations. Typically newer construction or fully renovated, in premium...

Class B Property

Middle-market rental properties in decent neighborhoods. Typically 15-30 years old, well-maintained, and attracting work...

Class C Property

Older, lower-quality rental properties in rougher neighborhoods. Higher cap rates (10%+) but also higher maintenance, hi...

A failure to meet building, health, or safety codes as determined by a city inspector. Common violations in Memphis incl...

Capital Improvement

A permanent structural change or restoration that increases a property's value, extends its useful life, or adapts it to...

Coordination Fee

A fee some property managers charge on top of maintenance costs for coordinating vendor work. Usually 5-10% of the invoi...

Comparative Market Analysis

A detailed report comparing a property to recently sold, listed, and expired comparable properties to estimate value. Si...

The visual attractiveness of a property as seen from the street. First impressions determine whether a prospective tenan...

Liquid funds set aside specifically for unexpected expenses and income gaps. Different from a reserve fund held by the P...

Cap Rate Compression

When cap rates in a market decrease over time, typically because property values are rising faster than rents. Cap rate ...

D

Debt Service Coverage Ratio

NOI divided by annual mortgage payments. A DSCR of 1.25 means the property earns 25% more than the mortgage costs. Lende...

The payment a property manager sends to the owner after deducting management fees, maintenance costs, and any other expe...

A tax deduction that lets you write off the cost of a rental property over 27.5 years. On a $150,000 property (land excl...

Detainer Warrant

The court filing that initiates a formal eviction case in Tennessee. After the notice period expires without resolution,...

Disparate Impact

A fair housing violation that occurs when a policy that appears neutral disproportionately affects a protected class. Yo...

Disclosure Requirement

The legal obligation to inform tenants or buyers about known property conditions. In Tennessee, landlords must disclose ...

Deferred Maintenance

Maintenance that should have been done but was postponed. Putting off a roof repair, ignoring a slow drain, skipping HVA...

The refund of all or part of the tenant's security deposit after move-out. Tennessee requires the deposit to be returned...

Deposit Deduction

An amount withheld from the security deposit for damage beyond normal wear and tear, unpaid rent, or other lease obligat...

A building with two separate residential units, either side-by-side or stacked. Duplexes are popular for house hacking a...

The total number of rental units in a portfolio. A duplex counts as two doors. A single-family home is one door. Propert...

The investigation period before purchasing a rental property. Inspect the physical condition, verify income and expenses...

E

Funds held by a neutral third party until specific conditions are met. In property management, escrow most commonly refe...

The difference between what your property is worth and what you owe on it. If a Memphis rental is worth $180,000 and you...

Effective Gross Income

Gross potential rent minus vacancy loss and credit loss, plus any other income like application fees, pet fees, or laund...

The legal process of removing a tenant from a rental property. In Tennessee, you cannot just change the locks. You must ...

Errors And Omissions Insurance

Professional liability insurance that covers a property manager against claims of negligence, mistakes, or failure to pe...

Emergency Maintenance

A maintenance issue that threatens the health, safety, or security of the tenant or property. Burst pipes, gas leaks, no...

Emergency Contact

A person designated by the tenant to be contacted in case of emergency. Collected at lease signing and kept on file. If ...

Eviction Notice

The formal written notice that begins the eviction process. In Tennessee, this is typically a 14-day notice for nonpayme...

The wiring, panels, outlets, and fixtures that provide power to the property. Electrical work must be done by a licensed...

Estoppel Certificate

A signed statement by a tenant confirming the lease terms, rent amount, deposit paid, and any existing claims against th...

F

Fair Market Value

What a willing buyer would pay a willing seller, with both having reasonable knowledge and neither under pressure. FMV i...

Fixed-Term Lease

A lease with a specific start and end date, typically 12 months. The tenant is obligated for the full term, and the land...

Federal and state laws that prohibit discrimination in housing based on protected classes. The Fair Housing Act covers r...

The legal obligation of a property manager to act in the best interest of the property owner. A PM with fiduciary duty c...

First Month Rent

The rent payment due before or at move-in covering the first month (or partial month) of tenancy. Combined with the secu...

Property damage caused by fire, smoke, or the water used to extinguish it. Even a small kitchen fire can cause $10,000+ ...

G

The total rent amount before any deductions. If your lease says $1,200/month, that is gross rent. It does not account fo...

Gross Rent Multiplier

Purchase price divided by annual gross rent. A $150,000 property renting for $16,800/year has a GRM of 8.9. Lower GRM me...

General Liability

The broadest form of liability coverage for property-related claims. Covers bodily injury, property damage, and personal...

The number of days after rent is due before a late fee can be charged. Tennessee law requires a minimum 5-day grace peri...

General Contractor

A licensed contractor who manages larger construction or renovation projects, coordinating subcontractors for different ...

H

The legal standard that a rental property must be safe and fit for human occupancy. In Tennessee, this means working plu...

Holdover Tenant

A tenant who stays in the unit after their lease expires without signing a new lease or renewal. In Tennessee, a holdove...

Living in one unit of a multifamily property and renting out the others, or renting rooms in a single-family home. The r...

Heating, Ventilation, and Air Conditioning. The system that controls your property's climate. In Memphis, HVAC is not op...

A general maintenance worker who handles small repairs and routine maintenance. Faucet repairs, drywall patches, door ad...

Habitability Standard

The minimum condition a rental property must meet to be legally occupied. In Tennessee, this includes working plumbing a...

I

Internal Rate Of Return

The annualized rate of return that accounts for the timing of all cash flows over your entire holding period. Unlike ROI...

Indemnification

A contractual obligation where one party agrees to cover the other's losses from specific claims or damages. In a proper...

Income Verification

Confirming that a rental applicant earns enough to afford the rent. Standard requirement is gross monthly income of 3x t...

J

Joint And Several Liability

A lease clause that makes every tenant on the lease fully responsible for all obligations, not just their share. If thre...

K

The system for tracking and controlling access to all managed properties. Includes physical keys, lockbox codes, smart l...

L

A one-time fee charged when a property manager places a new tenant. Usually 50-100% of one month's rent. On a $1,200/mon...

A charge applied when rent is not paid by the deadline. In Tennessee, a late fee cannot be charged until after a 5-day g...

Using borrowed money to control a more valuable asset. Putting $40,000 down on a $150,000 property means you control $15...

Loan-To-Value Ratio

The mortgage amount divided by the property value, expressed as a percentage. A $120,000 loan on a $150,000 property is ...

Lease Agreement

The legally binding contract between landlord and tenant that spells out the rules of occupancy. Rent amount, due date, ...

A legal claim a landlord may have on a tenant's personal property as security for unpaid rent. Tennessee law is specific...

Lease Violation

Any action by the tenant that breaks the terms of the lease agreement. Unauthorized pets, excessive noise, unauthorized ...

Lease Assignment

The transfer of a lease from one tenant to another. Unlike subletting, an assignment transfers all rights and obligation...

Liability Insurance

Insurance that covers claims arising from injuries or damage that occur on your property. A tenant slips on an icy walkw...

Lead-Based Paint Disclosure

A federally required disclosure for any residential property built before 1978. The landlord must provide the EPA pamphl...

Offering the current tenant a new lease term, typically with a rent adjustment. Start the renewal process 60-90 days bef...

Last Month Rent

An advance payment of the final month's rent, collected at move-in. Less common in Memphis than on the coasts, but some ...

The execution of the lease agreement by all parties. Every adult occupant over 18 should sign the lease. Review all term...

Rent paid after the due date. After the grace period expires, the late fee applies. Consistent late payment is a pattern...

Lease Expiration

The date a fixed-term lease ends. Start the renewal process 60-90 days before this date. If no action is taken, most Ten...

A material violation of the lease terms by either the landlord or the tenant. Tenant breaches include nonpayment, unauth...

The maintenance of the property's exterior grounds. Mowing, trimming, leaf removal, and basic plant care. In Memphis, we...

Licensed Contractor

A contractor who holds a valid state or local license for their trade. In Tennessee, HVAC, electrical, and plumbing work...

A supplemental document that modifies or adds terms to the original lease agreement. Common addendums include pet agreem...

Landlord Insurance

A specialized insurance policy for rental properties that covers the structure, liability, and lost rental income. Diffe...

The difference between the market rent and the actual rent being charged. If market rent is $1,300 and the tenant is pay...

Lease Termination Fee

A fee charged to a tenant who breaks the lease early. Typically 1-2 months rent. The fee compensates the landlord for tu...

An agreement that gives a tenant the right, but not the obligation, to purchase the rental property at a predetermined p...

A legal claim against a property as security for a debt. Mortgage liens, tax liens, mechanic's liens from unpaid contrac...

M

The monthly percentage a property management company charges to manage your rental. Industry standard is 8-10% of collec...

Maintenance Markup

The percentage a property management company adds on top of vendor invoices. Industry range is 0-20%. A 15% markup on a ...

Make-Ready Cost

What it costs to prepare a unit for a new tenant after the previous one moves out. Paint, cleaning, carpet, minor repair...

The rent a property would command on the open market based on current comps, location, condition, and amenities. Market ...

Month-To-Month Tenancy

A rental agreement that renews automatically every month with no fixed end date. Either party can terminate with 30 days...

Mold Disclosure

Notification to tenants about known mold presence or prior mold issues in the property. Tennessee does not have a specif...

Move-In Inspection

A documented walkthrough of the property's condition before the tenant takes possession. Photos, video, and a written ch...

Move-Out Inspection

A documented walkthrough after the tenant vacates, compared against the move-in inspection. Every item of damage beyond ...

The work required to prepare a vacant unit for a new tenant. Cleaning, paint touch-ups, carpet cleaning or replacement, ...

Market Analysis

A data-driven evaluation of rental market conditions for a specific area. Includes current rent levels, vacancy rates, a...

Monthly Statement

The financial report your property manager sends each month showing income collected, expenses paid, and the resulting o...

Move-In Checklist

A detailed form documenting the condition of every room, fixture, appliance, and surface at move-in. The tenant and PM b...

Maintenance Request

A formal report from the tenant that something in the unit needs repair. Should include a description of the issue, loca...

Move-Out Process

The sequence from notice to vacate through deposit return. Includes scheduling the move-out inspection, documenting cond...

A property with two or more residential units. Duplexes, triplexes, fourplexes, and apartment buildings. Multifamily pro...

Mold Remediation

The professional process of identifying, containing, and removing mold from a property. Mold grows where moisture exists...

N

Net Operating Income

Gross rental income minus all operating expenses, before mortgage payments. Includes property taxes, insurance, manageme...

What the owner actually receives after deducting vacancy loss, concessions, and any owner-paid expenses like utilities o...

Net Present Value

The current value of all future cash flows from an investment, discounted back at a rate that reflects your required ret...

Notice To Vacate

A written notice from either the landlord or tenant stating the intent to end the tenancy. In Tennessee, month-to-month ...

Not-To-Exceed threshold. The dollar amount a property manager can spend on a single repair without owner approval. Typic...

Notice To Vacate Tenant

Written notice from the tenant that they intend to move out. Most leases and Tennessee law require 30 days written notic...

Normal Wear And Tear

The expected deterioration of a property from ordinary use over time. Faded paint, minor scuffs on floors, worn carpet i...

O

Operating Expenses

Every recurring cost of running a rental property that is not the mortgage. Property taxes, insurance, management fees, ...

The portion of collected rent that gets paid out to the property owner after all expenses. This is the disbursement amou...

Operating Expense Ratio

Total operating expenses divided by effective gross income. A 45% OER means 45 cents of every dollar collected goes to e...

Operating Agreement

The internal document that defines how a business is owned and operated. For an LLC that owns rental property, the opera...

The percentage of units that are occupied at a given time. A 10-unit building with 9 tenants has a 90% occupancy rate. F...

Owner Reporting

The regular financial and operational updates a property manager provides to the property owner. At minimum: monthly inc...

The process of bringing a new property into management. Includes property inspection, lease review, tenant notification,...

The process of transitioning a property out of management. Includes transferring tenant deposits, providing lease docume...

P

Splitting a monthly charge based on the actual days used. If a tenant moves in on March 15, they owe 17/31 of the monthl...

Principal, Interest, Taxes, and Insurance. The four components of a typical monthly mortgage payment. On a Memphis renta...

Private Mortgage Insurance

An extra monthly fee lenders charge when your down payment is less than 20% of the property value. PMI protects the lend...

Price-To-Rent Ratio

Property price divided by annual rent. Similar to GRM but sometimes calculated as price divided by monthly rent. Below 1...

Pay-Or-Quit Notice

A written demand giving the tenant a specific number of days to pay overdue rent or move out. In Tennessee, the notice p...

Protected Class

A group of people legally protected from housing discrimination. Federal protected classes are race, color, national ori...

Property Management Agreement

The contract between a property owner and a management company that defines the scope of services, fees, authority limit...

Power Of Attorney

A legal document that authorizes someone to act on your behalf. Some property management agreements include limited powe...

A periodic physical inspection of the property while tenanted, typically quarterly or semi-annually. Checks for lease vi...

Preventive Maintenance

Scheduled maintenance performed to prevent equipment failure and extend useful life. HVAC filter changes, gutter cleanin...

Property Inspection

A formal evaluation of a property's condition, systems, and compliance. Includes annual inspections, seasonal checks, pr...

An additional deposit collected from tenants who have pets, intended to cover potential pet damage. Separate from the se...

An online platform where tenants pay rent electronically. ACH transfers, debit cards, credit cards. A payment portal red...

Property Damage

Damage to the rental property caused by the tenant, their guests, or their pets that goes beyond normal wear and tear. B...

The collection of all rental properties owned by a single investor or entity. A portfolio of 10 Memphis rentals generati...

Investment capital from accredited investors or institutions used to acquire, improve, or operate real estate assets. PE...

A projected financial statement showing expected income, expenses, and returns for a property. The seller's pro forma is...

The system of pipes, fixtures, and drains that delivers water and removes waste. Plumbing issues range from a $75 faucet...

Prevention and treatment of insects, rodents, and other pests. In Memphis, the main concerns are termites, roaches, ants...

Preventive Maintenance Schedule

A calendar of recurring maintenance tasks organized by frequency. Monthly: HVAC filter changes, smoke detector checks. Q...

The annual tax levied by local government based on the assessed value of the property. Shelby County (Memphis) assesses ...

Q

Quiet Enjoyment

The tenant's right to use and enjoy the rental property without unreasonable interference from the landlord. This does n...

R

Annual rental income divided by property value, expressed as a percentage. Gross yield uses gross rent; net yield uses i...

A document listing every unit in a portfolio with the tenant name, lease dates, monthly rent, deposit held, and payment ...

Money set aside for future repairs and unexpected expenses. Most property managers recommend keeping $2,000-$5,000 per p...

Return On Investment

The total return on your investment expressed as a percentage. In real estate, ROI includes cash flow, mortgage paydown,...

Comparable rental listings used to determine market rent for a specific property. Good comps match on location, size, co...

Reasonable Accommodation

A change to a rule, policy, or service that allows a person with a disability to use and enjoy their housing equally. Al...

Reasonable Modification

A physical change to a rental unit that allows a person with a disability to use the space. Grab bars in the bathroom, a...

Rental History Verification

Contacting previous landlords to verify a rental applicant's tenancy. Did they pay on time? Did they take care of the pr...

Raising the rent amount, typically at lease renewal. Tennessee has no rent control, so there is no cap on increases. Tha...

Rent Adjustment

Any change to the rent amount, up or down. Increases track market appreciation and rising costs. Decreases might be nece...

The day of the month rent is due, as specified in the lease. Almost universally the first of the month. Tennessee law re...

A written offer to the tenant for a new lease term, typically with an updated rent amount. Present it 60-90 days before ...

Real Estate Investment Trust

A company that owns, operates, or finances income-producing real estate and trades like a stock. REITs must distribute a...

The roof system that protects the property from weather. An asphalt shingle roof in Memphis lasts 20-25 years and costs ...

Routine Maintenance

The regular, recurring maintenance tasks that keep a property functional. Filter changes, gutter cleaning, caulking, wea...

Rent Concession

A temporary discount or incentive offered to attract or retain a tenant. A free month of rent, reduced rent for the firs...

Renters Insurance

An insurance policy that covers a tenant's personal property, liability, and additional living expenses if the unit beco...

The landlord's legal right to enter the rental property for specific purposes: repairs, inspections, showing to prospect...

An illegal action by a landlord in response to a tenant exercising their legal rights. If a tenant reports a code violat...

Rent Guarantee Insurance

An insurance policy that pays the landlord's rent if the tenant defaults. Coverage typically lasts 6-12 months and costs...

A record of all rent charges, payments, credits, and balances for a specific tenant. The rent ledger shows exactly what ...

S

Security Deposit

Money a tenant pays before moving in to cover potential damages beyond normal wear and tear. Tennessee does not cap the ...

When a tenant rents out part or all of their unit to another person. The original tenant remains on the lease and respon...

Single-Family Rental

A detached house rented to a single tenant or household. The most common rental property type in Memphis and the easiest...

A group investment structure where multiple investors pool capital to purchase a property or portfolio that none could a...

Clearing snow and ice from walkways, driveways, and parking areas. Memphis averages 2-4 snow events per year, rarely sev...

The federal Housing Choice Voucher Program that subsidizes rent for qualifying low-income tenants. The tenant pays a por...

Money set aside monthly for a specific future expense. If you know the HVAC will need replacement in 5 years at $6,000, ...

A scheduled visit for a prospective tenant to view the rental property. Showings can be in-person or virtual. For occupi...

Security System

Electronic monitoring equipment installed in a property for security. Smart locks, video doorbells, and alarm systems ar...

A device that detects smoke and sounds an alarm. Tennessee law requires working smoke detectors in every rental dwelling...

Self-Managing Landlord

A property owner who manages their rental properties without a property management company. Self-management saves 8-10% ...

T

A separate bank account where a property manager holds tenant security deposits and owner funds. Tennessee law requires ...

The total cost every time a tenant moves out and a new one moves in. Includes make-ready expenses, vacancy loss during t...

The legal protections tenants have under federal, state, and local law. In Tennessee, tenants have the right to a habita...

Trust Accounting

The accounting system that tracks all funds held on behalf of property owners and tenants. Security deposits, collected ...

Tenant Screening

The process of evaluating a rental applicant's ability and likelihood to pay rent and care for the property. Includes cr...

The complete process from one tenant moving out to the next tenant moving in. Includes move-out inspection, make-ready w...

Tenant Retention

The practice of keeping good tenants in place through responsive service, fair treatment, and competitive rent. A tenant...

A fully renovated, tenanted property sold to an investor as a ready-to-go investment. Memphis is one of the largest turn...

Tenant Improvement

Modifications to a rental unit requested or made by the tenant with landlord approval. In residential property managemen...

A tenant who occupies a property with the landlord's consent but without a formal lease. Either party can terminate the ...

U

Unauthorized Occupant

Someone living in the rental unit who is not on the lease. Overnight guests are not unauthorized occupants. Someone who ...

The process of analyzing a property's financials to determine if the investment meets your return requirements. True und...

V

The percentage of time a rental unit sits empty over a given period. Memphis averages around 7-9% depending on neighborh...

Vendor Dispatch

The process of assigning a maintenance request to a qualified vendor. Good dispatch means the right vendor for the job, ...

Value-Add Property

A property that can be improved to increase its value and rental income. Could be cosmetic updates, unit additions, bett...

The income lost during periods when a rental unit is unoccupied. On a $1,200/month unit vacant for 3 weeks during turnov...

W

Writ Of Possession

A court order that authorizes the sheriff or constable to physically remove a tenant from the property. Issued after the...

A documented request for maintenance or repair work. Includes the issue description, priority level, assigned vendor, es...

Property damage caused by water intrusion from leaks, floods, burst pipes, or appliance failures. Water damage is the mo...