Real estate investing glossary
59 terms for flips, BRRRRs, rentals and rehab projects. Each page has a plain definition, the math, and an example with real numbers.
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A
- Annualized ROIAnnualized ROI converts a deal's ROI into a yearly rate, so projects of different lengths can be compared. The simple version is ROI times 12 divided by the number of months.
- ARV (after repair value)ARV, or after repair value, is the price a house should sell for once the renovation is finished. You estimate it from recent sales of similar, already renovated homes nearby, adjusted for the differences.
- ARV confidenceARV confidence is a measure of how much you can trust an ARV estimate. It is high when several close, recent, similar comps agree, and low when there are few comps or their adjusted prices are far apart.
- ARV cushionARV cushion is how far the sale price can fall before a flip stops making money, shown as a percent of ARV. It is ARV minus break-even ARV, divided by ARV.
- As-is valueAs-is value is what a property is worth today in its current condition, before any repairs. It is the starting point that the rehab is supposed to lift up to the ARV.
- Assignment feeAn assignment fee is what a wholesaler earns for passing their purchase contract to an end buyer. It is the gap between the contract price and what the buyer agrees to pay.
B
- Break-even ARVBreak-even ARV is the lowest sale price at which a flip still does not lose money. The further your ARV sits above it, the safer the deal.
- BRRRR (buy, rehab, rent, refinance, repeat)BRRRR stands for buy, rehab, rent, refinance, repeat. You buy a house below value, fix it, rent it, then refinance on the new value to pull most or all of your cash back out for the next deal.
C
- Cap rate (capitalization rate)Cap rate is a rental's yearly NOI divided by its price or value. It shows the return as if you bought the property with all cash.
- CapEx (capital expenditures)CapEx (capital expenditures) is money you set aside each month for big replacements later, like a roof, HVAC system or water heater.
- Carry costs (holding costs)Carry costs, also called holding costs, are what it costs to own a property each month while you renovate and sell it: loan interest, property taxes, insurance, utilities and HOA dues.
- Cash flow (rental cash flow)Cash flow is the rent left over each month after the mortgage and every operating cost, including reserves for vacancy, repairs and capex.
- Cash left in (BRRRR)Cash left in is the amount of your own money still tied up in a BRRRR after the refinance pays off the first loan. Zero or less means you recovered all your cash.
- Cash on cash return (CoC)Cash on cash return (CoC) is one year of cash flow divided by the cash you have in the deal. $3,000 a year on $30,000 invested is a 10% cash on cash return.
- Cash-out refinanceA cash-out refinance replaces your current loan with a larger one and pays you the difference in cash, after closing costs. Investors use it to pull their money back out of a rehabbed property.
- Change orderA change order is a written change to the agreed scope of work, with its added cost and extra days. Once approved, it raises that line's budget and can push the finish date.
- Closing costsClosing costs are the fees paid to complete a purchase, sale or refinance, such as title insurance, settlement fees, recording fees, lender fees and transfer taxes.
- COI (certificate of insurance)A COI (certificate of insurance) is a document that proves a contractor carries insurance, such as general liability. Get it before work starts and watch the expiry date.
- Comps (comparable sales)Comps, short for comparable sales, are recent sales of similar homes near the property you are valuing. Adjusted for their differences, they are how you estimate ARV or as-is value.
- Contingency (rehab contingency)A rehab contingency is extra money added to the renovation budget for surprises, like rot behind a wall or a failed inspection. It is usually 10% to 25% of the base rehab, rising with the scope of work.
- Critical pathThe critical path is the chain of dependent tasks that sets your finish date. If any task on it slips, the whole job finishes later.
D
- Delayed financingDelayed financing is a refinance soon after an all-cash purchase that lets you pull your cash back out. The loan is usually capped at what you paid plus documented closing costs.
- Draws (rehab draws)Draws are the payments a lender releases from the rehab budget in stages as work is completed. You request a draw, the lender usually inspects, and then funds are released.
- DSCR (debt service coverage ratio)DSCR (debt service coverage ratio) is the monthly rent divided by the full monthly payment, PITIA. A DSCR of 1.25 means the rent is 25% more than the payment.
- Dutch interestDutch interest means the lender charges interest on the full loan amount from day one, including rehab funds you have not drawn yet. Non-Dutch lenders charge interest only on the money actually drawn.
E
F
- Fix and flipA fix and flip is a short-term investment where you buy a house below its potential value, renovate it, and sell it for a profit, usually within 4 to 12 months.
- Flood zone (FEMA flood zone)A flood zone is FEMA's flood map rating for an address. A high-risk zone usually means a lender will require flood insurance, which raises your monthly cost.
- FMR (fair market rent)FMR (fair market rent) is HUD's yearly estimate of rent for an area by bedroom count. Investors use it as a free check on their rent estimate.
H
- Hard money loanA hard money loan is a short-term loan from a private lender, secured by the property, used to buy and renovate a house. It closes fast and lends on the deal, but costs more than a bank loan in rate and points.
- Holdback (rehab holdback)A rehab holdback is the portion of a fix and flip loan that the lender keeps back at closing and pays out later through draws as the renovation is completed.
- House hackA house hack is buying a property, living in one part of it, and renting out the rest so the rent covers most of your housing payment.
I
L
- Lien waiver (lien release)A lien waiver is a signed document from a contractor or supplier giving up their right to file a lien on your property for work you have paid for.
- LTC (loan to cost)LTC, or loan to cost, is the loan amount divided by the project cost, usually purchase price plus rehab. A lender at 90% LTC covers 90% and you bring the other 10%.
- LTV (loan to value)LTV, or loan to value, is the loan amount divided by the property's appraised value. A 75% LTV loan on a $280,000 home is $210,000.
M
N
- Net profit (flip profit)Net profit on a flip is the sale price minus every cost of the deal: purchase, closing costs, rehab, loan costs, interest, holding costs and selling costs. It is what you actually keep, before income tax.
- NOI (net operating income)NOI (net operating income) is a rental's yearly income after vacancy and operating costs, before any mortgage payment. It measures what the property earns on its own.
P
- Peak cashPeak cash is the most of your own money tied up in a deal at any one time. On a flip it usually hits right before the sale; on a BRRRR, right before the refi.
- PITI (principal, interest, taxes, insurance)PITI is the full monthly house payment: principal, interest, property taxes and homeowners insurance. Add HOA dues and you get PITIA.
- PITIA (principal, interest, taxes, insurance, association dues)PITIA is principal, interest, taxes, insurance and association (HOA) dues. It is the full monthly payment a DSCR lender divides the rent by.
- Points (loan points)A point is an upfront loan fee equal to 1% of the loan amount, paid at closing. Two points on a $221,000 loan is $4,420.
- Preferred return (pref)A preferred return (pref) is a return a cash partner is paid first, before the remaining profit is split between the partners.
- Punch listA punch list is the list of small fixes found at the end of a rehab, like touch-up paint or a loose outlet cover, that must be done before you list or rent the house.
R
- Rate and term refi (limited cash-out)A rate and term refi pays off your existing loan and closing costs with little or no cash to you. It changes the rate, the term, or both, instead of pulling equity out.
- Refi (refinance)A refi (refinance) replaces your current loan with a new one. Investors refi to pull cash out, move from a short-term loan to a long-term one, or lower the payment.
- Rehab (rehab budget)Rehab is the repair and renovation work on an investment property, and the budget for it. A rehab estimate is usually built either from a per square foot preset for the scope or line by line from bids.
- ROI (return on investment)ROI, or return on investment, is profit divided by the money you put in. On a flip, ROI on cash is net profit divided by all the cash that came out of your pocket.
- Rough-in (plumbing, electrical and HVAC)Rough-in is the stage where pipes, wires and ducts are run inside open walls, floors and ceilings, before drywall goes up. It usually needs an inspection before walls close.
S
- Seasoning (refinance seasoning)Seasoning is how long you must own a property before a lender will refinance it on the new, higher value. Some lenders need 3, 6 or 12 months; some need none.
- Seller concessionsSeller concessions are money the seller gives the buyer at closing, usually toward the buyer's closing costs or repairs. They lower what the seller nets from the sale without changing the contract price.
- Seller financing (owner financing)Seller financing means the seller acts as the bank. Instead of getting a loan, you pay the seller over time under a note secured by the property.
- STR (short-term rental)An STR (short-term rental) is a property rented by the night, usually through sites like Airbnb or VRBO, instead of on a yearly lease.
- Sweat equitySweat equity is a partner's ownership or profit share earned through work, like finding the deal or running the rehab, instead of putting in cash.
V
W
Words you will see in the app
- Cash in
- All the money that comes out of your pocket: down payment, closing costs, points, the part of the rehab the lender does not cover, and holding costs.
- Cash out
- Money you take home at the refi, beyond paying off the old loan and closing costs.
- Commission
- What the real estate agents are paid when you sell, a percent of the sale price. If you list your own flips, you only pay the buyer's agent.
- Management
- The property manager's fee, usually a percent of the rent collected.
- Verdict
- Our plain call on the deal for the strategy you picked: Good deal, Marginal, or Pass. It comes from the deal score, the risk score and a few must-pass checks. It is a starting point, not advice.
- Deal score
- A 0 to 100 score of how the numbers stack up against common investor targets for that strategy, like profit, margin and return on cash for a flip.
- Risk score
- How fragile the deal is. It rises with thin margins, low ARV confidence, flood risk, and long timelines.
- Sensitivity
- How profit changes if the ARV, rehab or timeline moves. It shows what happens when things go worse than planned.
- Bid
- A contractor's price and days for one budget line. Accepting a bid counts it as committed money.
- Committed
- Money you have agreed to spend: accepted bids plus approved change orders, even if not paid yet.
- Forecast
- Our best guess of what the rehab will cost in the end, from budgets, accepted bids, change orders and payments so far.
- Variance
- Forecast minus budget. A positive number means the line is running over.
- W-9
- An IRS form a contractor gives you with their tax ID. You need it to file their 1099. Upload the file; we never ask you to type a tax ID.
- 1099
- A tax form you may need to file for a contractor you paid enough in a year. The app adds up totals per contractor so you know who needs one; check with your tax pro.
- Contractor portal
- A private link you send a contractor. They see only their own tasks and invoices, never your budget or profit.
- Deal inbox
- Your own email address for listing alerts. Forward deals to it and each one gets screened against your rules.
- Property lookups
- Paid data pulls (property record, value and sold comps, rent estimate) that run only when you press Pull data. The meter at the top shows how many are left this cycle; saved lookups are reused for free.
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