Real Estate Investing A-Z Glossary
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
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
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.
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.
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-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
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
GRI – Graduate Realtor Institute
GRM – Gross Rent Multiplier
HML – Hard Money Lender
HOA – Homeowners Association
HUD – Housing and Urban Development
IRR – Internal Rate of Return
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
MAO – Maximum Allowable Offer
MLS – Multiple Listing Service
NAR – National Association of Realtors
NNN – Triple Net Lease
NOI – Net Operating Income
NOO – Non-Owner Occupied
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&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
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
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
TIL – Truth In Lending
VA – Department of Veterans Affairs / Veterans Administration
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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