Key terms every US real estate investor should know — explained clearly for Israeli investors.
A
Appraisal
A professional assessment of a property's current market value, conducted by a licensed appraiser. Used at purchase, refinancing, and sale to establish an objective price benchmark.
Appreciation
The increase in a property's value over time, driven by market demand, inflation, and improvements. US Sun Belt markets have historically appreciated 3–7% per year.
ARV (After Repair Value)
The estimated market value of a property after all planned renovation work has been completed. CIG uses ARV to assess the investment quality and potential upside of each acquisition.
C
Cap Rate (Capitalization Rate)
Net Operating Income divided by the property's market value, expressed as a percentage. A cap rate of 7% means the property generates 7% of its value in net annual income. Used to compare investment properties on a like-for-like basis.
Cash-on-Cash Return
Annual net cash flow divided by total cash invested. The primary metric for evaluating rental property performance. A cash-on-cash return of 8% means every $100,000 invested generates $8,000 per year in net income.
Closing Costs
All fees and expenses incurred at the closing of a real estate transaction. Includes attorney fees, title insurance, company registration, recording fees, and transfer charges. For CIG investors, closing costs are itemized transparently before any purchase commitment.
D
Deed
The legal document that transfers ownership of a property from seller to buyer. Once recorded with the county, the deed establishes the buyer as the legal owner. All CIG properties are registered directly in the investor's name on the deed.
Depreciation
A US tax deduction that allows property owners to recover the cost of the building structure over 27.5 years (residential). This non-cash deduction can significantly reduce taxable rental income and is one of the key tax advantages of US real estate investment.
Due Diligence
The comprehensive investigation conducted before completing a property purchase. Includes title search, property inspection, financial analysis, zoning review, and market comparables. CIG performs full due diligence on every property before presenting it to investors.
E
Equity
The portion of a property's value that the owner holds free and clear (total value minus any outstanding loans). For all-cash investors, equity equals 100% of the property value from day one, and grows as the property appreciates.
Escrow
A neutral third-party arrangement in which funds and documents are held securely until all conditions of a real estate transaction are satisfied. Standard in all US property purchases.
F
FIRPTA
Foreign Investment in Real Property Tax Act. A US federal law requiring foreign sellers of US real estate to withhold 15% of the gross sale price at closing as a prepayment against capital gains tax. The excess over actual tax owed is refunded by the IRS after filing.
G
Gross Rent Multiplier (GRM)
Property purchase price divided by annual gross rental income. A GRM of 10 means the property costs ten times its annual gross rent. Lower GRM values generally indicate stronger investment value.
H
HOA (Homeowners Association)
A mandatory fee-paying organization in certain residential communities, typically condominiums and townhouse developments. HOA fees cover shared amenity maintenance and building insurance. They represent a fixed recurring cost and must be factored into investment return calculations.
HUD Statement (Closing Disclosure)
A standardised document prepared at closing that consolidates every financial transaction involved in a property sale — all costs paid by the buyer, all proceeds received by the seller. Provides a complete and transparent record of the transaction.
I
Insurance (Landlord / Hazard)
Property insurance covering the building against fire, storm damage, natural disasters, and third-party liability claims. Required by law in most US states and a standard ongoing cost for all investment properties. CIG arranges appropriate coverage for every property.
ITIN (Individual Taxpayer Identification Number)
A US tax identification number issued by the IRS to non-US residents who are required to file a US tax return. Israeli investors holding US property in their own name typically need an ITIN. CIG guides investors through the application process.
L
LLC (Limited Liability Company)
The most common legal structure used by foreign investors to hold US properties. An LLC provides personal liability protection — only the LLC's assets are at risk, not the investor's personal assets — and offers pass-through taxation, avoiding double taxation at the corporate level.
LLP (Limited Liability Partnership)
A partnership structure in which each partner's personal liability is limited to their investment. Used in some group investment arrangements where multiple investors collectively own a portfolio of properties.
M
Management Fee
The monthly fee paid to the property management company for overseeing the property. Typically 8–10% of monthly rent, charged only during periods of occupancy. This cost is factored into all return projections presented to CIG investors.
N
Net Operating Income (NOI)
Gross annual rental income minus all operating expenses — property management fees, property taxes, insurance, and maintenance reserves. Excludes mortgage payments. NOI is the foundation of property valuation and return analysis.
P
POF (Proof of Funds)
A document — typically a bank statement or letter — submitted alongside a purchase offer to confirm that the buyer has sufficient funds to complete the transaction. Required in most direct and bank-owned property purchases in the US.
Property Management
A professional service that handles all day-to-day operations of a rental property on behalf of the owner: tenant screening and placement, rent collection, maintenance coordination, and legal compliance. CIG coordinates property management for all investors across all four markets.
Property Tax
An annual tax levied by the local municipality based on the assessed value of the property. Rates vary by location; Texas has no state income tax but relatively higher property taxes (approximately 2% of value). Property tax is a fixed annual cost included in all CIG return projections.
R
Rental Yield
Annual rental income expressed as a percentage of the property purchase price. Gross yield ignores operating costs; net yield deducts all expenses. CIG targets a net rental yield of 6–9% on all investment properties.
Replacement Cost
The estimated cost to rebuild the property from the ground up (excluding land value), based on current construction specifications and finish quality. Used in insurance underwriting and as an indicator of construction quality relative to purchase price.
ROI (Return on Investment)
Total net profit expressed as a percentage of total capital invested. For real estate, ROI encompasses rental income, property appreciation, and tax benefits, minus all acquisition, operating, and disposal costs over the holding period.
T
Title Company
A private firm responsible for researching the ownership history of a property, resolving any title issues, and formally registering the transfer of ownership at closing. The title company acts as a neutral intermediary and issues title insurance.
Title Insurance
Insurance that protects the property owner against defects in the title — including undisclosed liens, ownership disputes, recording errors, and fraud. Obtained at closing and provides protection for as long as the investor owns the property. Standard in all US property purchases.
V
Vacancy Rate
The percentage of time a rental property is unoccupied. A vacancy rate of 5% equates to approximately 2–3 weeks of vacancy per year. CIG's markets currently maintain very low vacancy rates of 2–4%, meaning properties are rented for the vast majority of the year.