What is the difference between Gross and Net?

Gross means before any deductions

Net means after deductions

Gross and net are often used in describing leases

A gross lease is one where the the landlord receives his return in the form of rent before payment of any expenses; the tenant pays a fixed amount of rent per month.  The landlord then pays all the expenses of the property from his gross rent

A net lease is one where the landlord receives his return in the form of rent after payment of expenses; the tenant pays a fixed amount of rent per month AND an additional amount in respect of the expenses of the property (often termed a CAM payment in commercial leases).  The landlord then pays the expenses of the property from the contributions received from his tenants

What is the difference between Market Value and Market Price?

Market value is the price at which any asset would sell in an open, competitive auction

When licensed appraisers who are working under the auspices of USPAP to report on market value for real estate they are required to include an analysis of the highest and best use of the subject property

Market price is the price at which any asset is offered for sale in its marketplace

Most marketplaces do not have the characteristics of an open, competitive auction but display inefficiencies

Practically, in most instances, Market Value and Market Price will not be the same

However, if conditions of perfect markets, rational expectations and economic equilibrium exist market value and market price will be the same

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What is an investment property?

An Investment Property is purchased by an individual or entity for the purpose of generating a financial return

The return can be in the form or rent received from a tenant, and or a capital gain on the sale of the property

Examples include:

  • a single family home that is not occupied by the owner but rented to a third party
  • multi-family units
  • office buildings
  • industrial buildings
  • retail buildings