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Plain-English definitions for 60+ real estate terms used by buyers, sellers, investors, and agents. Searchable, expandable, and linked to deeper guides.

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📊 Property Valuation Terms 7 terms
ARV After Repair Value Estimated value after renovations +
The estimated market value of a property after all planned renovations are complete. Investors use ARV as the baseline for calculating profit potential, setting a maximum offer price, and securing financing.Example: A house needs $40K in repairs and comps show similar renovated homes selling for $220K. The ARV is $220K.
Full ARV Guide →
MAO Maximum Allowable Offer Ceiling price for an investment offer +
The highest price an investor should pay for a property while still hitting their target profit. Calculated as: MAO = ARV × 70% − Repair Costs. The 70% rule is a common investor benchmark, though it varies by strategy.Example: ARV $200K, repairs $30K → MAO = ($200K × 0.70) − $30K = $110K.
MAO Calculator →
FMV Fair Market Value Price a willing buyer & seller agree on +
The price a property would sell for in an open, competitive market between a knowledgeable buyer and seller, with neither under pressure. FMV differs from assessed value (used for taxes) and appraised value (lender’s estimate).Example: A home’s assessed value is $180K for tax purposes, but its FMV based on recent sales is $240K.
CMA Comparative Market Analysis Local pricing analysis using recent sales +
A report prepared by a real estate agent comparing a subject property to recently sold, similar homes (“comps”) in the same area. Used to set competitive list prices for sellers and inform offer prices for buyers.Example: Before listing, an agent pulls 5 comps within 0.5 miles that sold in the last 90 days to determine a $275K list price.
BPO Broker Price Opinion Agent’s estimate of value, used in short sales +
A licensed agent’s estimate of a property’s value, typically ordered by a lender during a short sale, foreclosure, or refinance. Less formal and less expensive than a full appraisal, but carries less weight with lenders.Example: A bank orders a BPO on a distressed property before approving a short sale price of $145K.
APPR Appraisal Licensed professional valuation required by lenders +
A licensed appraiser’s formal estimate of a property’s market value. Lenders require an appraisal before approving a mortgage. If the appraisal comes in below the purchase price, the deal may need to be renegotiated or the buyer must cover the gap.Example: A buyer offers $310K, but the appraisal comes in at $295K — the lender will only finance based on $295K.
AV Assessed Value Government value used for property tax purposes +
The dollar value assigned to a property by a local government assessor, used to calculate annual property taxes. Often lower than market value. Assessment methods vary by county and state.Example: A home worth $300K on the open market may have an assessed value of $240K, resulting in a lower property tax bill.
💼 Investment & Return Metrics 10 terms
FLIP Fix & Flip Buy, renovate, and resell for profit +
A real estate investment strategy where an investor buys a distressed property, renovates it, and sells it at a higher price. Profitability depends on buying at or below MAO, controlling rehab costs, and selling near ARV.Example: Buy at $110K, spend $35K on rehab, sell for $195K. Gross profit = $50K before carrying costs and commissions.
ARV + MAO Tool →
BRRRR Buy, Rehab, Rent, Refinance, Repeat Investor strategy to recycle capital +
A popular investor strategy: buy a distressed property, rehab it, rent it out, then do a cash-out refinance based on the new higher value — pulling out your invested capital to repeat the process on another property.Example: Buy for $80K + $30K rehab = $110K in. Refi at 75% of new $160K value = $120K out. Effectively recycled all capital.
Investing Hub →
CAP Cap Rate (Capitalization Rate) NOI ÷ Property Value — quick return gauge +
Annual Net Operating Income ÷ Property Value, expressed as a percentage. A higher cap rate = higher return (and typically higher risk). Used to compare income-producing properties regardless of financing structure.Example: Property worth $200K generates $16K NOI. Cap rate = 16K ÷ 200K = 8%.
Cap Rate Guide →
NOI Net Operating Income Revenue minus operating costs, before financing +
Total rental income minus all operating expenses (taxes, insurance, management, maintenance, vacancy allowance) — before mortgage payments. NOI is the foundation of most income property valuation methods.Example: $24K gross rent − $8K operating expenses = $16K NOI.
CoC Cash-on-Cash Return Annual cash flow ÷ total cash invested +
Annual pre-tax cash flow divided by total cash invested (down payment + closing costs + rehab). Measures return on actual dollars you put in, unlike cap rate which ignores financing.Example: $6K annual cash flow on $60K total cash invested = 10% CoC return.
GRM Gross Rent Multiplier Price ÷ Gross Annual Rent — quick snapshot +
A quick valuation shortcut: Purchase Price ÷ Gross Annual Rent. Lower GRM = better value. Not a substitute for full analysis but useful for quickly filtering deals.Example: $200K property rents for $20K/year → GRM = 10. A market GRM of 8 means the property is slightly overpriced.
ROI Return on Investment Total profit ÷ total money invested +
Net profit from a deal divided by total investment cost, expressed as a percentage. Broader than CoC — includes all forms of return (cash flow, appreciation, equity paydown, tax benefits).Example: Flip bought for $120K, sold for $185K, total costs $145K. ROI = $40K profit ÷ $145K = 27.6%.
CapEx Capital Expenditures Major long-term property improvements +
Large, infrequent expenses that extend the life or add value to a property — roof replacement, HVAC, plumbing, new windows. Investors budget CapEx separately from routine operating expenses when analyzing a rental’s true profitability.Example: A rental’s NOI looks strong, but a $15K roof replacement in 3 years must be factored into the real return.
DEPR Depreciation IRS tax benefit on investment property +
The IRS allows investors to deduct the declining value of a rental property over 27.5 years for residential properties. This “paper loss” reduces taxable income even when the property is appreciating — one of real estate’s most powerful tax advantages.Example: A $275K rental property (land excluded) = ~$10K annual depreciation deduction, reducing taxable income by $10K each year.
1031 1031 Exchange Defer capital gains taxes by reinvesting proceeds +
A tax-deferral strategy (IRS Section 1031) allowing investors to sell a property and reinvest proceeds into a “like-kind” property without paying capital gains tax at the time of sale. Must follow strict timelines: 45 days to identify replacement, 180 days to close.Example: Sell a rental for $400K with $150K in gains. Use a 1031 exchange to buy a larger property — defer the tax indefinitely.
💰 Financing & Mortgage Terms 10 terms
LTV Loan-to-Value Ratio Loan amount ÷ property value +
The ratio of your mortgage loan to the property’s appraised value. Lower LTV = less risk for the lender, which typically means better interest rates. Most conventional loans require 80% LTV or lower to avoid PMI.Example: $200K loan on a $250K home = 80% LTV. At 90% LTV, the lender will require PMI.
LTV Guide →
DTI Debt-to-Income Ratio Monthly debt ÷ gross monthly income +
Your total monthly debt payments divided by gross monthly income. Lenders use DTI to assess affordability. Most conventional lenders want DTI under 43%; FHA allows up to 50% in some cases.Example: $2,000/month in total debts ÷ $6,000 gross income = 33.3% DTI — well within qualifying range.
PITI Principal, Interest, Taxes & Insurance The four components of a mortgage payment +
The complete breakdown of a monthly mortgage payment: Principal (loan balance reduction), Interest (cost of borrowing), Taxes (property tax escrow), and Insurance (homeowner’s insurance escrow).Example: A $1,800/month payment might break down as: $600 principal, $800 interest, $250 taxes, $150 insurance.
PMI Private Mortgage Insurance Required when down payment is under 20% +
Insurance that protects the lender (not you) if you default. Required on conventional loans when your down payment is less than 20% of the purchase price. Adds $50–$200+/month to your payment. Can be removed once you reach 20% equity.Example: On a $300K loan at 80 bps, PMI adds $200/month until you hit 80% LTV.
HML Hard Money Loan Short-term, asset-based investor financing +
A short-term loan from a private lender secured by the property itself, not the borrower’s creditworthiness. Common in fix-and-flip deals. Faster to close than bank loans but comes with higher interest rates (8–15%+) and shorter terms (6–24 months).Example: A flipper closes on a distressed property in 7 days using hard money at 12% interest, then refinances or sells within 6 months.
ARM Adjustable-Rate Mortgage Rate adjusts periodically based on market index +
A mortgage with an interest rate that changes periodically after an initial fixed period (e.g., 5/1 ARM = fixed for 5 years, then adjusts annually). Lower initial rates than fixed mortgages but carries rate risk over time.Example: A 7/1 ARM at 5.5% stays fixed for 7 years, then adjusts annually — useful if you plan to sell within the fixed period.
HELOC Home Equity Line of Credit Revolving credit secured by home equity +
A revolving line of credit secured by your home’s equity. Works like a credit card — borrow what you need, when you need it. Often used for renovations, investment down payments, or debt consolidation. Variable rate tied to prime.Example: A homeowner with $120K equity opens a $80K HELOC to fund a down payment on an investment property.
SF Seller Financing Seller carries the loan instead of a bank +
The seller acts as the lender — the buyer makes payments directly to the seller over time instead of using a bank. Useful when buyers can’t qualify for traditional financing or sellers want installment income. Terms are negotiable.Example: A seller agrees to carry a $120K note at 6% over 10 years. Buyer avoids bank qualifying; seller earns interest income.
BRDG Bridge Loan Temporary financing between two transactions +
A short-term loan used to bridge the gap between buying a new property and selling an existing one. Typically 6–12 months, higher interest rates. Common when a buyer needs to close before their current home sells.Example: A homeowner uses a bridge loan to buy their next home in April and repays it in July when their current home closes.
AMRT Amortization Paying off a loan through scheduled payments +
The process of paying off a loan through regular, scheduled payments of principal and interest. Early payments are mostly interest; later payments are mostly principal. A 30-year mortgage is fully amortized by the final payment.Example: On a 30-year mortgage, month 1 might apply $200 to principal and $1,400 to interest. By year 25, those proportions flip.
📜 Contracts & Deal Terms 8 terms
PSA Purchase & Sale Agreement The binding contract to buy or sell real estate +
The legally binding contract between a buyer and seller that outlines price, terms, contingencies, closing date, and what’s included. Once signed by both parties, the deal is under contract. Also called a Purchase Agreement or Sales Contract.Example: Once the PSA is executed, the buyer has 10 days to complete their inspection contingency.
EMD Earnest Money Deposit Buyer’s good-faith deposit held in escrow +
A deposit paid by the buyer when the contract is signed to demonstrate serious intent. Held in escrow until closing. Applied toward the purchase price at closing. If the buyer backs out without a valid contingency, the seller may keep the deposit.Example: 1–3% of purchase price is typical. On a $300K home, expect a $3K–$9K EMD.
CONT Contingency A condition that must be met before closing +
A clause in a purchase contract that allows the buyer (or seller) to exit without penalty if a specific condition isn’t met. Common contingencies: inspection, financing, and appraisal. Waiving contingencies strengthens an offer in competitive markets but increases risk.Example: Financing contingency protects the buyer if their mortgage falls through — they get their EMD back.
A/I As-Is Property sold in current condition, no repairs +
The seller will make no repairs and the buyer accepts the property in its current condition. Buyers should still conduct an inspection — as-is doesn’t mean no due diligence, it means the seller won’t negotiate on discovered issues.Example: An investor buying a distressed property purchases as-is after factoring known repair costs into their MAO.
ESCR Escrow Neutral third-party holds funds during transaction +
A neutral third party holds funds, documents, or assets on behalf of the buyer and seller until all conditions are met and the transaction is complete. Also refers to the ongoing account lenders use to collect and pay property taxes and insurance.Example: The buyer’s $5K EMD is held in escrow by the title company and released to the seller at closing.
ASGN Assignment of Contract Transferring contract rights to another buyer +
A wholesaler gets a property under contract, then transfers (“assigns”) their rights to another buyer for a fee — without ever buying the property themselves. The fee is the assignment fee, typically $5K–$20K+.Example: Wholesaler contracts a property at $100K, assigns it to an investor for $108K, earns an $8K assignment fee.
DD Due Diligence Buyer’s research period before closing +
The period after a contract is signed where the buyer conducts inspections, reviews title, verifies financials (for investment properties), and confirms all material facts. Your window to discover problems and renegotiate — or walk away.Example: A 10-day DD period allows time for a home inspection, survey, and review of permits before committing fully.
CC Closing Costs Fees paid at closing by buyer and/or seller +
Fees and expenses paid at closing, separate from the purchase price. Buyers typically pay 2–5% of the loan in lender fees, title insurance, and prepaids. Sellers typically pay 6–10% including agent commissions, transfer taxes, and concessions.Example: A buyer purchasing a $300K home may pay $6K–$15K in closing costs on top of their down payment.
🤝 Partnerships & Deal Structure 6 terms
JV Joint Venture Partnership to share profits, risks, and responsibilities +
A formal partnership between two or more parties to pursue a specific real estate deal or project. Each partner contributes something — capital, expertise, deal flow, or labor — and shares in the profit and risk per the JV agreement.Example: One partner brings $200K in capital, another brings deal-finding and management skills. They split profits 50/50.
EQ Equity Split How ownership and profits are divided +
The agreed-upon percentage of ownership or profit each partner receives in a deal. Splits are negotiated based on contributions of capital, time, risk, and expertise. Common structures: 50/50, 70/30, or preferred returns to capital investors.Example: Passive investor provides all capital (70% split), active partner manages the project (30% split).
WHSL Wholesaling Assign a purchase contract to another investor for a fee +
Finding deeply discounted properties, getting them under contract, then selling (assigning) that contract to an end buyer for a fee — without ever purchasing or rehabbing the property. Requires little capital but significant deal-finding skill.Example: Contract a distressed home at $90K, find an investor who’ll pay $100K for the deal, pocket a $10K assignment fee.
DC Double Close Two back-to-back closings on the same property +
A wholesaling technique where the wholesaler briefly takes title to the property (A→B close), then immediately resells it to the end buyer (B→C close). Unlike assignment, the wholesaler appears as the seller — useful when the assignment fee would be large or the seller/buyer objects to assignment.Example: Wholesaler closes at 10am as buyer for $95K, then closes at 2pm as seller for $118K.
SUB2 Subject-To Buyer takes over property subject to existing mortgage +
An investor takes title to a property while the seller’s existing mortgage stays in place. The investor makes payments on the original loan without formally assuming it. Allows acquiring properties with low existing rates without new financing.Example: Seller has a 3.5% mortgage balance of $140K. Investor takes property subject-to that loan, avoiding today’s 7% rates.
PML Private Money Lender Individual (not a bank) who lends on real estate deals +
An individual investor who lends their personal capital for real estate deals. Terms are fully negotiable — often lower rates than hard money, more flexible underwriting, and faster closings. Built on relationships rather than institutional criteria.Example: A dentist with $300K in savings lends to a local investor at 8% secured by a first mortgage on the flip property.
🏘️ Rental Property Terms 7 terms
RR Rent Roll List of tenants, units, and current rents +
A document listing all rental units, current tenants, monthly rents, lease terms, and payment status. Essential due diligence when buying an income property — verifies what the actual (not projected) income is.Example: When underwriting a 12-unit building, the buyer requests a rent roll showing 10 occupied units at $900/month and 2 vacant.
VAC Vacancy Rate Percentage of units unoccupied at a given time +
The percentage of rental units that are unoccupied. Investors typically budget 5–10% vacancy in their projections even if the property is currently full. Market vacancy rates signal supply/demand balance in a rental market.Example: A 10-unit building with 1 vacant unit has a 10% vacancy rate. At $900/month, that’s $900/month in lost income.
S8 Section 8 / Housing Choice Voucher Federal rental assistance program (HUD) +
A federal HUD program that subsidizes rent for low-income tenants. The government pays a portion of rent directly to the landlord. Investors often value Section 8 for reliable government-backed payments, though properties must pass HUD inspections.Example: A Section 8 tenant pays $200/month and HUD pays $800/month directly to the landlord — $1,000 total guaranteed rent.
CF Cash Flow Money left after all expenses including mortgage +
Rental income minus ALL expenses including mortgage payment, taxes, insurance, maintenance, management, and vacancy. Positive cash flow means the property pays you. Negative cash flow means you’re subsidizing it monthly.Example: $1,400/month rent − $1,150 all-in expenses = $250/month positive cash flow ($3,000/year).
ADU Accessory Dwelling Unit Secondary housing unit on the same property +
A secondary residential unit on the same lot as a primary home — basement apartment, converted garage, detached cottage, or in-law suite. ADUs can significantly increase rental income potential and are now permitted by many municipalities that once restricted them.Example: A house-hacker buys a home with a basement ADU, rents it for $900/month — offsetting most of the mortgage.
HH House Hacking Live in one unit, rent others to offset costs +
A strategy where you buy a multi-unit property (duplex, triplex, 4-plex), live in one unit, and rent the others — using tenant income to offset or eliminate your housing cost. Qualifies for owner-occupied financing (lower rates, lower down payment).Example: Buy a duplex for $300K, live in one unit, rent the other for $1,200/month. Mortgage is $1,800 — net housing cost: $600.
PM Property Management Third party manages day-to-day rental operations +
A property management company (or individual) handles tenant placement, rent collection, maintenance, and legal compliance on behalf of the owner. Typically costs 8–12% of monthly rent. Enables passive ownership but reduces cash flow.Example: An out-of-state investor pays 10% ($120/month) to a PM company to manage their $1,200/month rental property.
📈 Market & Real Estate Lingo 8 terms
DOM Days on Market How long a listing has been active +
The number of days a property has been listed for sale. Low DOM = strong demand or well-priced home. High DOM can signal overpricing, condition issues, or a slower market. Buyers use DOM as a negotiating signal — high DOM means more leverage.Example: A home listed 90+ days in a 30-day average DOM market signals something is wrong — price or condition.
SM Seller’s Market Demand exceeds supply — sellers hold leverage +
A market condition where buyer demand outpaces available inventory, typically when supply is under 3 months. Sellers receive multiple offers, homes sell above asking, and concessions are rare. Buyers must move fast and compete aggressively.Example: In a seller’s market, a well-priced home gets 8 offers in the first weekend and sells $20K over asking.
BM Buyer’s Market Supply exceeds demand — buyers hold leverage +
When inventory exceeds buyer demand — typically over 6 months of supply. Buyers have more choices, homes sit longer, and sellers are more willing to negotiate on price, concessions, and repairs.Example: In a buyer’s market, an investor can offer 10% below asking with a full inspection contingency and still win the deal.
OM Off-Market Property sold privately, not publicly listed +
A property sold without being publicly listed on the MLS. Off-market deals often come from direct mail, driving for dollars, networking, or motivated sellers. Investors prize off-market deals for less competition and better pricing.Example: A wholesaler finds a motivated seller through a cold-call campaign and locks up the deal before it ever hits the MLS.
ABS Absorption Rate How quickly homes are selling in a market +
The rate at which available homes in a market are sold over a given period. Expressed as months of supply (active listings ÷ monthly sales). Under 3 months = seller’s market; over 6 months = buyer’s market.Example: 300 active listings ÷ 100 homes sold/month = 3 months of supply — a competitive seller’s market.
REO Real Estate Owned (Bank-Owned) Property owned by lender after foreclosure +
A property the bank has taken back after a foreclosure auction failed to sell it. Banks often sell REO properties at a discount to get them off their books quickly. Properties are typically sold as-is, but titles are usually clear.Example: An investor buys a bank-owned REO for $85K at 70% of its $120K market value, knowing the bank wants a quick close.
APPR Appreciation Increase in property value over time +
The increase in a property’s value over time. Natural (market) appreciation comes from economic forces; forced appreciation comes from renovations or improved operations. Long-term real estate historically appreciates 3–5% per year nationally.Example: A home bought for $250K in 2015 worth $390K in 2025 appreciated ~56% or ~4.5% annually.
MLS Multiple Listing Service The database agents use to list and find homes +
A database of properties listed for sale, accessible to licensed real estate agents. Agents list properties on the MLS to expose them to all buyer’s agents. Public sites like Zillow and Realtor.com pull much of their data from the MLS.Example: Listing on the MLS immediately exposes a property to thousands of active buyer searches in the local market.
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