Guest Post: The Way to San Jose

Endless Sun

You might want to know the following jargon to understand (or rent or buy) into the San Jose real estate market, or into any real estate market:

If you are renting:

1. Common Area maintenance (CAM): This refers to the money that is paid by the tenants to the landlord so that property taxes can be covered, as well as insurance and maintenance.
2. CPI: This is the Consumer Price Index, which is often used to calculate the increase in annual rent that can compensate inflation.
3. Estoppel Certificate: This a signed letter that is provided by the tenant confirming his/her agreement to the rent and terms and conditions.
4. Gross lease: This means the lease in which the tenants only pay the rent while the landlord pays the taxes, insurance and any cost for maintenance.

If you are buying:

1. Cash on Cash: This means the annual return percentage on the down payment that you make. It excludes appreciation value and is calculated by dividing the first year cash flow by the initial down payment that you have made.
2. Due Diligence period: This is the period (15 – 30 days) that is provided to the buyer so that they can make investigations about the property. This is the time during which the buyer may decide to buy or cancel purchase.
3. Cap rate: This is also known as capitalization rate. It means the ratio of the first year Net Operating Income to the price of purchase. The income from rent (if you will have the property rented) depends on this cap rate. The higher the rate, the higher the income.
4. CPD: This means Car Per Day. In other words it is the volume of traffic on the road.

Disclaimer: The definitions above are the provided by guest writer Daisy Williams.  YTBR does not attest to its accuracy.