1 . Term: Cap Rate

• Simply explained, it is the proportion of net operating income (NOI) to purchase price

2. Term: Net Operating Income

• It is estimated by estimating the revenue of the property and deducting all running expenses such as repairs, maintenance, property taxes, HOA fees, and so on

3. Term: Cash Flow

• Cash flow is the amount of money you have left over at the end of each month after paying all operating expenses (including loan payments)

4. Term: Cash-on-Cash Return

• This metric is expressed as a proportion of the annual pre-tax cash flow to the total amount of cash invested
• The cash-on-cash return quantifies the annual return in relation to the amount of money invested

5. Term: CapEx

• Capital Expenditures, often known as CapEx, are defined as new acquisitions or major improvements/renovations that extend the life of a property, such as replacing a roof, adding an extension, or finishing the basement

6. Term: 1031 Exchange

• However, under Section 1031 of the Internal Revenue Code of the United States, a taxpayer may defer (pay later) capital gains and corresponding federal income tax liabilities in the exchange for certain types of property

7. Term: HOA fees

• A homeowner’s association is a group that develops and enforces rules for properties in a subdivision, neighborhood, or condominium
• When you buy property within an HOA’s jurisdiction, you automatically become a member and are expected to pay monthly HOA fees to help with the upkeep and improvement of the association’s properties

8. Term: Gross Rental Yield

• Gross rental yield is the entire income earned by a property divided by the purchase price and closing fees
• This is what you get before deducting operating expenses (maintenance, property management, insurance, HOA fees, etc)

9. Term: Appreciation

• An increase in the value of an asset over time is referred to as appreciation
• This is the inverse of depreciation, which is the gradual decrease in the value of an asset

10. Term: Adjustable Rate Mortgage (ARM)

• An adjustable-rate mortgage (ARM) is a loan with no set interest rate
• An ARM, on the other hand, might fluctuate monthly over the life of the loan based on the benchmark interest rate, which fluctuates dependent on capital market circumstance

11. Term: Fixed-Rate Mortgage

• A fixed-rate mortgage is a mortgage loan with a fixed interest rate that does not alter over the life of the loan

12. Term: Equity

• The difference between the current market value of the property and the amount owed on the property’s mortgage is referred to as equity

13. Term: Turnkey Property

• A turnkey property is one that is totally or nearly completely move-in ready
• Turnkey properties are appealing as an investment since investors may buy a house and rent it out immediately without having to do any substantial renovations

14. Term: Capital Gains Tax

• The difference in the value of a property relative to its acquisition price is referred to as capital gain or loss
• A short-term capital gain is one year or less; a long-term capital gain is one year or more
• Both must be reported on your tax returns, although short-term capital gains are taxed at a greater rate than long-term capital gains

15. Term: Debt-to-Equity Ratio

• The debt-to-equity (D/E) ratio is a measure of ownership in real estate
• This ratio assists you in determining how much of your property is genuinely yours (assuming you financed it with a mortgage) and how much debt you owe

16. Term: Escrow

• Escrow is the process by which an unbiased third party retains anything of value during a transaction

17. Term: Closing Costs

• Closing costs are fees incurred at the conclusion of a real estate transaction
• These fees vary depending on where you live, the type of loan you choose, and the home you purchase

18. Term: Internal Rate of Return (IRR)

• The internal rate of return (IRR) is a measure of a property’s long-term profitability that considers annual net cash flow and equity change over time

19. Term: Inspection Contingency

• A purchase agreement provision known as an inspection contingency allows the buyer to:
  *Hire a home inspector to inspect the property
  *Get the inspector’s report on the home’s condition and concerns
  *Negotiate a cost-sharing arrangement with the seller, or cancel the purchase agreement and receive their earnest money deposit back

20. Term: MLS

• According to the National Association of Realtors, the Multiple Listing Service (MLS) is a private offer of cooperation and pay by listing brokers to other real estate agents

21.Term: FSBO

• For Sale by Owner (FSBO) refers to a real estate owner who sells his or her property without the assistance of a real estate agent or listing the property on the MLS

22. Term: FDR

• A formal dining room (FDR) is a distinct dining room from an eat-in kitchen or breakfast nook included in many modern open floor plans
• FDRs are typically located near the kitchen to facilitate access

23. Term: CMA

• A Comparative Market Analysis (CMA) is a report that provides current and sold listings, listings that have been removed from the market, and listings that have expired without being sold within a specified time period and in a specific neighborhood or geographic area

24. Term: ABR

• Accredited Buyer Representative (ABR) is a credential for real estate professionals who have completed the Real Estate Buyer’s Agent Council’s (REBAC) rigorous training and practical experience requirements

25. Term: NAR

• The National Association of REALTORS® (NAR) is America’s largest trade union, with about 1.4 million members working in all aspects of the residential and commercial real estate industry

26. Term: PITI

• A mortgage payment that includes Principal, Interest, (Real Estate) Taxes, and Insurance is referred to as PITI
• PITI is the monthly payment on the majority of residential mortgages

27. Term: FMV

• Fair Market Value (FMV) is the reasonable price for which a property would sell on the open market if both buyer and seller are reasonably knowledgeable, not under undue pressure to complete the transaction and acting in their own best interests

28. Term: LTV

• The loan-to-value (LTV) ratio compares the overall debt or leverage on a property to its market value

29. Term: RTO

• Rent to Own (RTO) is a hybrid of a real estate lease and a real estate purchase arrangement

30. Term: FHA

• FHA mortgage loans are insured by the Federal Housing Administration (FHA)
• FHA loans are popular with first-time home purchasers because they allow for 3.5 percent down payments and credit scores as low as 580, or even lower if a little bigger down payment is made.

31. Term: CRB

• The Certified Real Estate Brokerage Manager (CRB) certificate is intended for experienced real estate company owners, brokers, managers, and supervisors who desire to elevate their professional standards and improve the management of their business and branch offices

32. Term: GRI

• The amount of money received in rent plus any other income such as application fees, pet fees, parking fees, advance rent, or any expenses paid by the tenant to the landlord that are not needed as part of the lease is referred to as gross rental income (GRI)

33. Term: SFH

• The most frequent sort of rental property for real estate investors is a single-family home (SFH)
• An SFH is a free-standing house that differs from a townhome or apartment in that it does not share walls or amenities with another property and is situated on its own plot of ground

34. Term: HVAC

• To heat and cool a home, heating, ventilation, and air conditioning (HVAC) systems are employed
• HVAC units with integrated heating and cooling systems are common, although a rental property’s HVAC system may consist of an air conditioning unit and a separate furnace unit

REFERENCE

1. https://learn.roofstock.com/blog/real-estate-investing-acronyms-terms

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