Glossary / Abbreviations

To help you understand the some of the terminology and 'jargon' that may be used when purchasing a property, we have complied this listing.

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rc - reverse cycle

Real Rate of Return - is the rate of return you get on an investment after the effects of inflation.

rec - recess

rec - recess

Redemption - refers to cashing in or redeeming your investment.

Reducing Loan - is a loan for which the capital is repaid in equal instalments. The initial repayments are relatively higher, but, as the capital is repaid, both the interest charges and the repayment amounts also fall.

Refinance - The paying off of one loan with the borrowed proceeds from a new loan using retaining the same property as security.

rem - remote control

remaining economic life - The estimated period during which improvements will continue to contribute to property value.

rend - rendered

replacement allowance - 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.

replacement cost - The estimated cost to construct, at current prices as of the effective appraisal date, a building with utility equivalent to the building being appraised using modern materials and current standards and layout

Reserve Price - The minimum price at which a seller will accept at auction for the sale to proceed.

residual techniques - Procedures used to capitalize the income allocated to an investment component of unknown value after all investment components of known values have been satisfied.

ret - return

Return - is the reward for investing your money. It can be in two forms: an income (such as dividends), or capital growth (such as an increase in the value of your investment). Returns depend on many variables: the asset class invested in, the duration of investment, economic conditions, Government influences, and the impact of inflation. The past performance of an investment can only be a guide to its future return and, in general, the higher the potential return, the greater the risk. Research into the past performance of the various asset classes strongly indicates that investments in shares have the highest potential return over the long term, with cash and fixed interest investments having the lowest potential return. Property fits in between these two classes, with a medium return over the long term

reversion - A lump sum benefit that an investor receives or expects to receive at the termination of an investment; also called reversionary benefit.

reversion factor - A compound interest factor that is used to discount a single future payment to its present worth, given the appropriate discount rate and discount period

Revolving Credit - describes a facility which credits your regular income directly against your mortgage, as a form of repayment. However, only a part of your income will eventually be used as a mortgage repayment. As you use the rest of your income, you can "draw down" on your revolving credit facility. The benefit is that, within a small window of opportunity between your income being credited against your mortgage and drawing down, the balance of your mortgage is reduced and this, of course, reduces the interest payments. Such a facility can reduce the interest payments over the term of your mortgage by thousands of dollars.

rf - roof

Right of First Refusal - The provisioning within an agreement that provides an entity the first opportunity to purchase or lease the property before it is offered for sale or lease to others.

Risk - as it relates to investment, describes the volatility of the returns on an investment. This refers to both the timing and the amount of the return. For example, if you invest $1,000 in a term deposit at your local bank for three month at 7%, there's very little doubt that at the end of three months you'll receive your $1,000 back as well as the appropriate interest payment (in this instance, $17.50 before tax). In this example, there's very little risk to both the value and the timing of your return. However, if you invested $1,000 in Telecom shares for three months, there's no way of knowing how much you'll receive in three months time when you sell the shares. You might receive back $800, or $1,200 - no one knows for certain. The share price may increase by $17.50 in a single day, or it may take a year to increase by that value. In this example, there's a greater risk because both the value and timing of the return are uncertain

risk factor - The portion of a given return or rate of return from capital invested in an enterprise that is assumed to cover the risks associated with the particular investment.

row - right of way