Decode the Lingo: Key Real Estate Terms for Investors

ARV

After Repair Value

The estimated value of a property after all repairs and renovations are completed.

BPO

Broker Price Opinion

An estimate of a property’s value made by a real estate broker or agent.

Cap Rate

Capitalization Rate

Used to evaluate the return on investment for a real estate property.

CCIM

Certified Commercial Investment Member

A designation for commercial real estate professionals who have completed advanced coursework.

CC&R

Covenants, Conditions, and Restrictions

Rules imposed on a property by a homeowner‚ association or developer.

CMA

Comparative Market Analysis

An estimate of a home's value based on recent sales of similar properties.

CoC/CCR

Cash-on-Cash Return

The annual return on investment based on the cash invested.

COF

Cost of Funds

The interest rate paid by lenders for the funds they lend to borrowers.

Comp

Comparable Property

A recently sold property similar in size, location, and condition used for valuation.

COO

Certificate of Occupancy

A document issued by a local government agency stating a building is in compliance with codes.

CPM

Certified Property Manager

A professional designation for property managers who meet education and experience standards.

CRE

Commercial Real Estate

Property used exclusively for business-related purposes.

DSCR

Debt Service Coverage Ratio

A measure of a property's ability to cover its debt payments with income.

FHA

Federal Housing Administration

A government agency that insures mortgages for lower-income and first-time homebuyers.

FMR

Fair Market Rent

The estimated rental cost of a property based on the local market.

FMV

Fair Market Value

The price a property would sell for in a competitive market.

FSBO

For Sale By Owner

A home that is being sold directly by the owner without an agent.

GRM

Gross Rent Multiplier

A rough estimate of a property’s value based on its rental income.

GSI

Gross Scheduled Income

The total rental income a property would earn if fully rented.

HOA

Homeowners Association

An organization that enforces rules and manages shared amenities in a community.

HUD

Department of Housing and Urban Development

A U.S. government agency that oversees housing programs.

IRR

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments.

LOI

Letter of Intent

A document outlining the understanding between parties before a contract is finalized.

LTV

Loan-to-Value

The ratio of a loan to the value of an asset purchased.

MLS

Multiple Listing Service

A database used by real estate brokers to share property listings.

NOI

Net Operating Income

The income from a property after operating expenses are deducted.

NAR

National Association of Realtors

A trade association for real estate professionals.

PITI

Principal, Interest, Taxes, and Insurance

The components of a monthly mortgage payment.

PMI

Private Mortgage Insurance

Insurance that protects lenders if the borrower defaults on a loan.

REIT

Real Estate Investment Trust

A company that owns or finances income-producing real estate.

REO

Real Estate Owned

Property owned by a lender, usually due to foreclosure.

ROI

Return on Investment

A measure of the profitability of an investment.

SFH

Single-Family Home

A standalone residential structure intended for one family.

SFR

Single-Family Residence

Another term for a detached house for one family.

VA

Veterans Affairs

A government agency that provides home loan benefits to veterans.

Zoning

Regulations governing land use

Laws that determine how land can be used in certain areas.

ADR

Average Daily Rate

A metric used in hospitality to show the average rental income per occupied room.

CAM

Common Area Maintenance

Fees paid by tenants for the upkeep of shared property spaces.

EMD

Earnest Money Deposit

A deposit made to demonstrate a buyer's serious intent to purchase.

FICO

Fair Isaac Corporation

A company that created a popular credit scoring model.

GFE

Good Faith Estimate

A document that outlines the estimated costs of a mortgage.

GPM

Graduated Payment Mortgage

A mortgage with lower initial payments that increase over time.

HELOC

Home Equity Line of Credit

A revolving credit line secured by the equity in a home.

HML

Hard Money Lender

A private lender offering short-term loans secured by real estate.

IO

Interest Only

A loan where payments cover only interest for a set period.

JV

Joint Venture

A partnership between two or more parties for a specific real estate project.

MAO

Maximum Allowable Offer

The highest price an investor can pay for a property to meet investment goals.

MIP

Mortgage Insurance Premium

Insurance paid by FHA loan borrowers to protect the lender.

NPN

Non-Performing Note

A loan where the borrower is not making scheduled payments.

PUD

Planned Unit Development

A type of building development with individually owned units and shared spaces.

QC

Quitclaim Deed

A deed that transfers a person's interest in a property without warranties.

REIA

Real Estate Investors Association

A networking group for people interested in real estate investing.

SF

Square Footage

The area measurement of a property.

USDA

United States Department of Agriculture

A government agency offering rural housing assistance.