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Property Investing Glossary
The complete library of all the terms landlords should know.
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Banking
Financials
Operations
Insurance
Loans
Investing
Terms
Loans
Servicing
Servicing is the process in which a financial institution collects the payments of a loan.
Loans
Underwriter
Underwriters are the people who approve or deny a loan application.
Loans
Title insurance
Title insurance protects lenders and buyers for losses that happen because of title-related issues.
Loans
Seller financing
Seller financing is when the seller offers a mortgage-like loan to the buyer.
Loans
Mortgage Loan Originator (MLO)
A Mortgage Loan Originator (MLO) is a licensed person who can generate loans for a financial institution.
Loans
Jumbo loan
Jumbo loan is a mortgage that exceeds the limits set by Fannie Mae and Freddie Mac.
Loans
Home Equity Line of Credit (HELOC)
HELOCs are secured loan products that provides borrowers with a line of credit.
Loans
Fixed Rate Mortgage
A Fixed Rate Mortgage has the same interest rate for the entire loan.
Loans
Home equity
Home equity is the amount of the home value owned.
Loans
Rental income advance
A rental income advance is any amount of money landlords accept before the billed period.
Loans
Discount rate
Discount rate is the value of the future cash flows after factoring in the net present value of money.
Loans
Default
When a loan defaults, it means the borrower failed to repay a loan based on the established requirements.
Loans
Conforming loan
Conforming loans are mortgages that fit criteria established by Fannie Mae and Freddie Mac.
Loans
Closing costs
Closing costs are fees you pay to the lender when you finalize your loan.
Loans
Cash Out Refinance
Cash Out Refi is a type of mortgage where when you refinance, you take a portion of the equity out as cash.
Loans
Annual Percentage Rate (APR)
APR is a calculation of the simple yearly interest paid by the borrower.
Loans
Amortization
Amortization is the process of breaking apart an asset over a loan period.
Loans
Unsecured loan
Unsecured loans are provided to borrowers without underlying collateral.
Loans
Secured loan
Secured loans require borrowers to put up collateral.
Loans
Adjustable Rate Mortgage (ARM)
Adjustable Rate Mortgage (ARM) is a type of mortgage where interest can change over time.
Loans
Principal, Interest, Taxes, Insurance (PITI)
PITI are the different pieces of a mortgage payment.
Loans
Mortgage
A mortgage is a secured loan used to purchase real estate.
Loans
Down payment
A down payment is the partial amount a borrower pays when financing a loan.
Loans
NMLS
NMLS is the licensing system for mortgage loan originators and mortgage businesses.
Loans
Hard money
Hard money loans are short-term loans guaranteed by an underlying asset.
Operations
Mortgage Interest deduction
Mortgage Interest Deduction lets property investor deduct mortgage interest payments off of their taxes.
Operations
Depreciation
Depreciation is when a physical asset decreases in value due to wear and tear.
Operations
Rent collection
Rent collection is the process of charging tenants for occupying the property.
Operations
Homeowner Association (HOA)
Homeowner Associations plan for and enforce rules for a community.
Operations
Fair Housing Act
The Fair Housing Act guarantees fair treatment when buying, renting, and financing homes.
Operations
Eviction
Eviction is the act of forcibly expelling a tenant from a property.
Operations
Quitclaim deed
A quitclaim deed is when a grantor drops all claims of the property to the grantee.
Operations
Warranty deed
Warranty deeds transfer property from sellers to buyers with the guarantee that the title is owned by the seller.
Operations
Deed
Deed is the legal document that confers ownership of the property to the holder.
Operations
Permit
A permit is a written document that lets property investors make a major modification to their home.
Operations
Sublease
A sublease is a lease contract between a tenant and a subtenant.
Operations
Property title
Property title is the legal ownership of the property.
Operations
Zoning codes
Zoning codes are regulations that determine how land can be used and what can be built.
Operations
Cash for Keys
Cash for Keys is when a property investor provides a cash incentive for an existing tenant to move out.
Operations
Screening
Tenant screening is the process of checking a prospective tenant's credit, criminal, and eviction history.
Operations
Squatter
A squatter is anyone who illegally occupies an unused building or land.
Operations
Unlevered yield
Unlevered yield is the return on investment a investor gets without the use of debt.
Operations
Month-to-month (M2M)
A month-to-month (M2M) lease does not have an end date and can be active indefinitely.
Operations
Security deposit
A security deposit is the money a landlord can hold in the event of a tenant's damages or failure to pay rent.
Operations
Rental income
Rental income is any payment landlords receive for the use of the property.
Operations
Limited Liability Company (LLC)
A LLC is a hybrid business structure combining corporations and partnerships.
Operations
Lease
A rental lease is a contract that allows a tenant to live in a property owned by a landlord.
Operations
Capital expenditures (CapEx)
CapEx is an expense incurred for acquisition, improvement, or replacement of long-term assets.
Operations
Real estate broker
A real estate broker is a licensed individual who real estate agents work for.
Operations
Bookkeeping
Bookkeeping is the act of keeping financial records and transactions organized.
Operations
Amenity
Amenity is a feature on a property that makes it more desirable to live in.
Operations
Property developer
Property developers renovate and build properties for a higher value.
Operations
Vacancy rate
Vacancy rate is a measure of how often you investment property is unoccupied when it could be.
Operations
MLS
MLS are databases maintained by agents and brokers to facilitate property sales and purchases.
Operations
Property Manager
Property managers are individuals or businesses hired to oversee the rental property operations.
Financials
Debt Service Coverage Ratio (DSCR)
The Debt Service Coverage Ratio measures the property's ability to cover its expenses.
Financials
Internal Rate of Return (IRR)
The IRR is the return of a property investment discounted by the time invested.
Financials
Expense ratio
The Expense ratio is a ratio measuring operating expenses to gross income.
Financials
Bonus depreciation
Bonus depreciation allows property investors to immediately depreciate eligible assets.
Financials
Statement of Cash Flows (CF)
The Statement of Cash Flows details cash moving into and out of the business.
Financials
Income Statement (IS)
The Income Statement, also known as the P&L, shows how much money is earned or lost in the business.
Financials
Rental comps
Rental comps are used by property investors to know how much rent to charge.
Financials
Pro forma
Pro Formas are financial projections for a selected investment.
Financials
Net operating income (NOI)
The Net Operating Income is a measure of a property's profitability.
Financials
Cap rate
Cap rate is a calculation of the property's expect net operating income relative to the market value.
Financials
Cash on Cash (CoC) return
Cash-on-cash is the cash earned relative to the cash invested in a property.
Financials
Return on investment (ROI)
ROI is a measurement on the net profit of an investment over a period of time.
Financials
After Repair Value (ARV)
After Repair Value is the value of the property after any repairs and add-ons.
Financials
Free cash flow (FCF)
Free cash flow is the company's cash flow subtracted by any capital expenditures.
Financials
Operating Cash Flow (CF)
Cash flow is the total amount of gross cash a business generates less any expenses.
Financials
50% Rule
50% rule is a metric property investors use to estimate expected operating expenses.
Financials
Gross Rent Multiplier (GRM)
The gross rent multiplier helps lenders estimate how fast a loan can be paid off with rental income.
Financials
1% Rule
1% Rule is a guideline where rentals generate at least 1% of its purchase price in rent.
Financials
Debt to Income (DTI)
Debt to Income is a ratio of monthly liabilities versus earnings.
Financials
Loan to Value (LTV)
Loan to Value measures property risk and is a ratio of the loan amount to the property value.
Banking
Wire transfers
A wire transfer allows banks and financial institutions transfer money worldwide.
Banking
Virtual cards
Virtual cards are payment cards that can only be accessed through web or mobile.
Banking
Physical cards
Physical cards are regular, often plastic, cards issued by banks to spend on.
Banking
Neobank
Neobanks are digital-only banks that stores deposits through a sponsor bank.
Banking
FDIC
The FDIC is a Congressional agency that supplies deposit insurance in the event of bank failures.
Banking
Bank Holiday
A bank holiday is a business day where banks and other financial institutions are closed.
Banking
ACH
ACH is a electronic network for processing money transfers via debits and credits.
Banking
Tenant Security Account
The Tenant Security Account is a dedicated account opened to store tenant security deposits.
Insurance
Umbrella insurance
Umbrella insurance is a form of liability coverage that applies on top of traditional insurance coverages.
Insurance
Renter's insurance
Renter's insurance protects tenants of belongings and liabilities in their unit.
Insurance
Private Mortgage Insurance (PMI)
Private Mortgage Insurance protects lenders when borrowers put up a down payment less than 20%.
Insurance
Landlord's insurance
Landlord's insurance is a rental property insurance that covers liabilities for property owners.
Insurance
Homeowners insurance
Homeowners insurance protects individuals of losses to the covered property.
Investing
House flipping
House flipping, or Rehab, is when an investor buys a distressed property, fixes it up, and then sells it again.
Investing
Appraiser
Appraisers assess the fair market value of a property.
Investing
Arms length transaction
Arms length is a type of transaction where the buyer and seller are unaffiliated.
Investing
Non-Arms length transaction
Non-Arms length is a type of transaction where the buyer and seller have a personal relationship.
Investing
Earnest money
Earnest money is a cash deposit buyers put down to demonstrate a sincere offer.
Investing
1031 Exchange
1031 Exchanges defer capital gains taxes when the investor exchanges a qualified property.
Investing
FIRE
FIRE is a movement and battlecry for living frugally to retire early.
Investing
Wholesaler
In real estate, a wholesaler re-assigns the purchase contract to another interested buyer.
Investing
Turnkey
Turnkey is a strategy for investing in properties that are already operational and has tenants.
Investing
Syndicate
A real estate syndicate is when a group of investors pool money together to buy real estate.
Investing
Single Family Rental (SFR)
Single Family Rentals are rental properties with only one single unit.
Investing
Schedule E
Schedule E is an IRS tax form that lets property investors report rental income and losses.
Investing
Real Estate Investment Trust (REIT)
REITs, or Real Estate Investment Trusts, are funds that invest in real estate.
Investing
Real estate agent
Real estate agents are licensed people who facilitate a home purchase, sale, or rent.
Investing
Purchase comps
Purchase comps is the process of using recently sold comparable homes to determine a price for the home.
Investing
Off Market Listings
Off Market Listings are for-sale properties that aren't listed on MLS.
Investing
Multifamily
A multifamily property is any property with 2 or more units.
Investing
Joint Venture (JV)
In real estate, a Joint Venture (JV) is when multiple parties combine to invest together.
Investing
Independent landlord
Independent landlords (also: DIY landlords or private landlords) actively manage rentals themselves.
Investing
iBuyer
An iBuyer is a technology-enabled home buyer that makes an instant cash offer.
Investing
House hacking
House hacking refers to renting portions of a purchased property out to tenants.
Investing
Limited Partner (LP)
LPs are typically silent capital-providers for the real estate investment.
Investing
General Partner (GP)
General Partner, or GP, are typically people in charge of the property investment in a joint venture.
Investing
For Sale by Owner (FSBO)
For Sale By Owner, or FSBO, is when homes are sold by the homeowner rather than real estate agents.
Investing
Residential real estate
Residential real estate is a property, with 1-4 units, used as a tenant's primary residence.
Investing
Commercial real estate
Commercial real estate is a property used for business purposes and often have 5 or more units.
Investing
Capital gains
Capital gains is the realized appreciation of an asset.
Investing
BRRRR
The BRRRR Method is an investing strategy popular for building passive income.
Investing
Accessory Dwelling Unit (ADU)
ADU is a detached secondary unit on a parcel zoned for single family homes.
Investing
Balance Sheet (BS)
Balance Sheet is a financial statement that details a business' Assets, Liabilities, and Equity.
Investing
Appreciation
Appreciation is when a property's value increases relative to its historical value.
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