Flipper – The MyHouseDeals.com Blog

As a real estate investor, it’s sometimes hard to keep up with the jargon, especially when you are first getting started. That’s why I decided to create this page with a description of the most important and frequently used real estate terms, acronyms, and techniques.

The goal is to keep this as up-to-date as possible, I encourage you to collaborate and add new terms to the comments section. Thanks for your support and I hope you’ll find this to be a useful resource. — Doug

Real Estate Investing (and Related) Terms

-A-

ABR – Accredited Buyer Representative

Acre – a measure of land (43,560 square feet)

Alquist-Priolo Earthquake Fault Zoning Act – A California state law that requires real estate agents / owners to disclose to prospective buyers that a property is in an Earthquake Fault Zone.

APR – Annual Percentage Rate

ARM – Adjustable Rate Mortgage

ARV – After-Repaired Value

-B-

Balloon Mortgage – A loan that is repaid by a series of small, periodic payments until a certain date, then either the balance is due in a single payment (balloon payment) or the amount of the payments increases significantly.

-C-

CAP – Capitalization

CBR – Certified Buyer Representative

CCR – Conditions, Covenants, and Restrictions

CFD – Contract for Deed

CHMS – Certified Home Marketing Specialist

CLHMS – Certified Luxury Home Marketing Specialist

Closing Costs – The expenses incurred by transferring ownership of property that normally include an origination fee, attorneys’ fees, taxes, charges for title insurance, a survey and an amount in escrow.

CLTV – Combined Loan To Value

CMA – Comparative Market Analysis

CNS – Certified Negotiation Specialist

COCR – Cash on Cash Return

COF – Cost of Funds

Commercial Real Estate – Real estate held for the production of income through leases for commercial or business use (for example, office buildings, retail shops, and shopping centers).

Common Area Assessments – Also known as ‘HOA fees.’ Fees paid by individual owners in a PUD. Generally used to maintain collectively used areas like landscaping, the pool, corridors, etc.

Comparable Sales – Also known as ‘comps.’ Recent sales of similar properties in nearby areas that are used to help determine the market value of a property.

Convertible ARM – An adjustable rate mortgage that allows the borrower to convert the ARM to a fixed-rate mortgage within a specific time or under certain conditions.

CRB – Certified Real Estate Broker

CRE – Creative Real Estate

CRS – Certified Residential Specialist

CRV – Certificate of Reasonable Value – Issued by the Veterans Administration, a CRV is based on an appraiser’s estimate of the value of the property to be purchased. A VA loan may not exceed the amount of the CRV.

-D-

DBA – Doing Business As

DCR – Debt Coverage Ratio – A comparison of net income of a property with the cost of payments (P & I) on the mortgage on the property. This is used to determine if the property will generate enough income to pay for itself.

DOS – Due On Sale Clause

DOT – Deed of Trust

-E-

e-PRO – Internet Professional

Easement – A right of way giving persons other than a property owner access to or through the property

ECOA – Equal Credit Opportunity Act – A federal law that prohibits discrimination of credit applicants based on race, color, national origin, religion, sex, marital status or receipt of income from public assistance programs

-F-

FCRA – Fair Credit Reporting Act

FHA – Federal Housing Administration

Flipping – The act of assigning a contract on a property to another investor who becomes the final buyer. Also known as ‘Wholesaling.’

FMR – Fair Market Rent

FMV – Fair Market Value

Foreclosure – The legal and professional proceeding in which a mortgagee, or other lienholder, usually a lender, obtains a court ordered termination of a mortgagor’s equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the owner the right of redemption if the borrower repays the debt. When this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lienholders can and do use foreclosure for overdue taxes, unpaid contractors’ bills or overdue HOA dues or assessments.

FSBO – For Sale by Owner

-G-

GRI – Graduate Realtor Institute

GRM – Gross Rent Multiplier

-H-

HML – Hard Money Lender

HOA – Homeowners Association

HUD – Housing and Urban Development

-I-

IRR – Internal Rate of Return

-L-

Landlord – A landowner/homeowner who leases to others

L/O – Lease Option

LLC – Limited Liability Company

LLP – Limited Liability Partnership

LOC – Line of Credit

LOI – Letter of Intent

LPOA – Limited Power of Attorney

LTV – Loan to Value

-M-

MAO – Maximum Allowable Offer

MLS – Multiple Listing Service

-N-

NAR – National Association of Realtors

NNN – Triple Net Lease

NOI – Net Operating Income

NOO – Non-Owner Occupied

-O-

O/F – Owner Finance

OO – Owner Occupied

Open Mortgage – A mortgage that may be repaid in full or in part at any time during the life of the mortgage without notice, bonus or penalty.

-P-

P&S – Purchase and Sale

Party Wall – A shared wall between 2 pieces of property, usually in row houses or townhouses, that generally sits on the property line.

PCF – Price to Cash Flow (ratio)

PITI – Principal, Interest, Taxes and Insurance

PITI Reserves – The cash amount a borrower must have on hand after making a downpayment and paying all closing costs. Generally an amount equal to what the borrower will pay for PITI for a pre-defined number of months.

PMI – Private Mortgage Insurance

Pre-Foreclosure – The period between when the lender files a foreclosure notice of default in public records and the date the property is to be sold at public auction or trustee’s sale. The average time it takes to foreclose on a property varies widely by state, from 90 days to 10 months.

POA – Power of Attorney

PUD – Planned Unit Development

-R-

REALTOR® – Member of the National Association of Realtors

Rehabbing – Remodeling or fixing up a property to increase its market value for re-sale or rental

REI – Real Estate Investing

REIA – Real Estate Investors Association

REO – Real Estate Owned

ROI – Return On Investment

RTO – Rent to Own

-S-

SFH – Single Family House

SFR – Single Family Residence

SRES – Senior Real Estate Specialist

Sub2 – Subject to existing financing

Subject 2 – Subject to existing financing

Subject to – Subject to existing financing

-T-

TIL – Truth In Lending

-V-

VA – Department of Veterans Affairs / Veterans Administration

-W-

WBFP – Wood burning fireplace

Wholesaling – The act of assigning a contract on a property to another investor who becomes the final buyer. Also known as ‘Flipping.’

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