REAL ESTATE INVESTING GLOSSARY
After Repair Value (ARV)
The estimated value of a property after renovations are completed.
Appreciation
The estimated value of a property after renovations are completed.
BRRRR Method
A strategy involving Buy, Rehab, Rent, Refinance, and Repeat to build wealth.
CapEx
Long-term expenses for major repairs or improvements (e.g., roof replacement).
Cap Rate
A measure of a property’s profitability, calculated as NOI divided by purchase price.
Cash Flow
The net income from a property after deducting expenses from rental income.
Cash-on-Cash Return
The annual return on an investor’s cash investment, expressed as a percentage.
Closing Costs
Fees and expenses paid during the final stages of a real estate transaction.
CMA
An analysis of similar properties in the area to determine a property’s value.
Debt Service Coverage Ratio (DSCR)
A metric used by lenders to determine a borrower’s ability to repay a loan, calculated as rental income divided by expenses.
Depreciation
A tax deduction that allows property owners to recover the cost of an asset over time.
Equity
The difference between the market value of a property and amount owed on its mortgage.
Escrow
A financial arrangement where a third party holds funds or documents during a transaction.
Fixed-Rate Mortgage
A mortgage with a fixed interest rate over the loan’s term.
Hard Money Loan
A short-term loan secured by real estate, often used for rehab projects.
Escrow
A financial arrangement where a third party holds funds or documents during a transaction.
Inspection Contingency
A clause in a purchase contract allowing the buyer to cancel based on inspection results.
Loan-to-Cost (LTC) Ratio
The ratio of a loan amount to the property’s purchase plus rehab costs (short-term loan).
Loan-to-Value (LTV) Ratio
The ratio of a loan amount to the property’s appraised value, expressed as a percentage.
Market Value
The current price at which a property would sell on the open market.
Net Operating Income (NOI)
A property’s income after operating expenses, excluding debt payments.
Property Management
The oversight of rental properties, including tenant relations, maintenance, and rent collection.
Rehab
Renovating or repairing a property to improve its value or functionality.
Return on Investment (ROI)
A measure of profitability, calculated as net profit divided by total investment.
Tenant Screening
The process of evaluating potential tenants to ensure they meet rental criteria.
Turnkey Property
A fully renovated property that is ready to rent (and producing income for DSCR loans).