This glossary covers investment strategy terms used in real estate.
Investment Strategies
Core
Low-risk strategy investing in stable, income-producing properties in prime locations.
Core-Plus
Moderate-risk strategy with stable properties requiring minor improvements.
Value-Add
Higher-risk strategy creating value through renovation, repositioning, or improved management.
Opportunistic
Highest-risk strategy pursuing maximum returns through development or distressed assets.
Fix-and-Flip
Buying undervalued properties, renovating, and selling for profit.
Portfolio Management
Diversification
Spreading investments across multiple assets to reduce risk.
Asset Allocation
Distribution of investments across different asset types.
Rebalancing
Adjusting portfolio to maintain desired allocation.
Concentration Risk
Risk from having too much invested in a single asset.
Risk Concepts
Risk Tolerance
Investor's ability and willingness to accept investment risk.
Risk-Adjusted Return
Return evaluated relative to risk taken.
Downside Protection
Strategies to limit potential losses.
Margin of Safety
Buffer between purchase price and estimated value.
Return Concepts
Target Return
Expected or desired return from an investment.
Absolute Return
Total return without comparison to benchmark.
Relative Return
Return compared to a benchmark or alternative.
Risk Premium
Additional return expected for taking on risk.
Investment Approach
Active Management
Hands-on approach to improve investment performance.
Passive Investment
Minimal involvement, relying on professional management.
Buy and Hold
Long-term ownership strategy for appreciation and income.
Value Investing
Seeking undervalued assets with potential for appreciation.
Exit Strategies
Exit Strategy
Plan for how and when to sell or dispose of investment.
Liquidity Event
Transaction converting investment to cash.
Hold Period
Expected duration of investment before exit.
Exit Multiple
Sale price relative to original investment.
Understanding strategy terminology helps investors develop and communicate their investment approach.
