Real Estate Glossary

A tax-deferred exchange allowing an investor to sell a property and reinvest the proceeds into a 'like-kind' property without paying capital gains tax at the time of sale.

A guideline stating an investor should pay no more than 70% of a property's ARV minus estimated repair costs. Leaves room for profit margin and holding costs.

A property owner who does not live at the property they own. A prime target for skip tracing because they may be more motivated to sell.

The rate at which available homes are sold in a specific market over a given period. High absorption rate = seller's market; low absorption rate = buyer's market.

Accessory Dwelling Unit — a secondary housing unit on a single-family property (garage apartment, in-law suite, tiny home). Adds rental income and can significantly increase property value.

The process of paying off a loan over time through regular payments that cover both principal and interest. A 30-year fixed mortgage is fully amortized over 360 payments.

A professional estimate of a property's market value by a licensed appraiser. Required by most lenders. Different from a BPO (Broker Price Opinion) or CMA (agent estimate).

After Repair Value — the estimated market value of a property after all repairs and renovations have been completed. The baseline for calculating deal profitability.

The profit a wholesaler earns for assigning a purchase contract to a cash buyer. Typically ranges from $5,000–$30,000+ per deal.

A legal document transferring the wholesaler's rights and obligations in a purchase agreement to a new buyer (assignee). The original contract price stays the same.

Processing a large list of leads (CSV) through a skip trace service all at once, rather than one-by-one. Usually cheaper per record at scale.

A person who finds distressed properties and brings them to an investor or wholesaler in exchange for a referral fee. Different from a wholesaler because they don't contract the property.

Broker Price Opinion — an informal property valuation by a licensed real estate agent or broker. Less expensive than a full appraisal. Used by lenders to estimate value quickly.

A short-term loan used to 'bridge' the gap between buying a new property and selling an existing one, or between construction completion and permanent financing.

Buy, Rehab, Rent, Refinance, Repeat — a strategy to recycle capital by refinancing a rehabbed rental property to pull out equity and fund the next deal.

Purchasing rental properties to hold long-term for cash flow and appreciation. The foundation of most wealth-building real estate portfolios.

A wholesaler's database of cash buyers who are actively looking for properties to purchase. Building a large, active buyer's list is essential for consistent deal flow.

A market condition where supply exceeds demand, giving buyers more negotiating power. Properties sit longer and sellers often make concessions.

Bring Your Own Key — using your own API key for a third-party service (e.g., Firecrawl) instead of a shared key. Reduces per-record cost significantly.

Capitalization Rate — NOI ÷ Property Value. Measures the return on investment independent of financing. Higher cap rate = higher potential return but often higher risk.

The profit from selling an asset. Short-term (held <1 year) is taxed as ordinary income. Long-term (held ≥1 year) is taxed at preferential rates (0%, 15%, or 20%).

An investor who purchases properties with cash (no mortgage), enabling fast closings — often 7–14 days. The end buyer in most wholesale deals.

Annual pre-tax cash flow ÷ Total cash invested. Measures actual cash yield on invested capital, accounting for mortgage payments.

The historical sequence of ownership transfers for a property, from the original grant to the current owner. Title companies research the chain of title to identify any defects.

A property that has been cited by local authorities for violating building, safety, or zoning codes. Owners with multiple violations are often motivated to sell.

Calling property owners directly from a skip-traced list to gauge interest in selling. High-volume activity; typical conversion rates are 1–5% of contacts to appointments.

Comparable sales (comps) are recently sold, similar properties used to estimate a subject property's value. A CMA (Comparative Market Analysis) is a formal compilation of comps by an agent.

A type of housing where owners have title to individual units and shared ownership of common areas. Subject to HOA rules and fees. Can be harder to finance than SFRs.

An IRS-approved accounting strategy that accelerates depreciation on certain components of a building (fixtures, landscaping, parking lots) from 39 years to 5–7 years, generating large early tax deductions.

Any non-traditional financing structure: seller financing, subject-to, lease options, wrap mortgages. Allows deals that wouldn't work with conventional bank financing.

Customer Relationship Management — software used to track leads, follow-up tasks, communications, and deal stages. Essential for managing large lead lists in wholesaling.

Multiple wholesalers passing a deal through a chain, each adding their fee. Usually results in an overpriced deal and is generally frowned upon.

A legal document that transfers ownership of real property from one party (grantor) to another (grantee). Must be signed, notarized, and recorded with the county.

The IRS allows investors to deduct a portion of a property's value each year (27.5 years for residential, 39 years for commercial) as a 'paper expense,' reducing taxable income.

Sending physical mailers (postcards, letters) to a targeted list of property owners. One of the most proven lead generation methods in wholesaling despite lower response rates (0.5–2%).

A property being sold as a result of a divorce settlement. Both parties often want the asset liquidated quickly.

Do Not Call — a list of phone numbers that cannot legally be contacted for telemarketing. Always scrub your skip trace results against the DNC registry before calling.

Days on Market — how long a listing has been active on the MLS. High DOM (60+ days) can signal overpricing or issues with the property.

A transaction where the wholesaler actually purchases the property (A→B) and immediately sells it to the end buyer (B→C), often on the same day. Used when an assignment isn't possible.

The practice of physically driving through neighborhoods looking for distressed properties (overgrown lawn, boarded windows, peeling paint) and noting addresses for follow-up.

Debt Service Coverage Ratio — NOI ÷ Annual Debt Service. Lenders typically require ≥1.25x. Measures whether a property generates enough income to cover its loan payments.

The investigation process before closing on a property. Includes title search, inspection, financial analysis, permit research, and tenant lease review.

A legal right for a non-owner to use a portion of a property for a specific purpose (e.g., utility easement, access road). Easements run with the land and transfer to new owners.

Earnest Money Deposit — a deposit made by the buyer to demonstrate serious intent to purchase. Typically 1–5% of the purchase price. Goes toward the down payment at closing.

Any claim, lien, or liability attached to a property that may affect the owner's ability to transfer clear title. Includes mortgages, easements, unpaid taxes, and judgments.

Phase I and Phase II assessments evaluate a property for environmental contamination (asbestos, lead paint, soil contamination). Often required for commercial real estate.

The difference between a property's current market value and the outstanding mortgage balance. Equity builds through appreciation, loan paydown, and forced appreciation via rehab.

Buying a distressed property, renovating it, and selling it at a profit. Requires capital, project management skills, and accurate ARV estimation.

A predefined series of contacts (calls, texts, mailers) sent to a lead over time. Most deals come from the 5th–12th contact. 'The fortune is in the follow-up.'

The legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. Can be judicial (court-ordered) or non-judicial (power of sale).

A property with no mortgage or liens. The owner receives 100% of the sale price. Often associated with older homeowners who have paid off their mortgage.

For Sale By Owner — a property listed directly by the owner without a real estate agent. FSBO sellers avoid paying agent commissions but handle the sale process themselves.

Short-term financing that covers the gap between a hard money loan and the total project cost. A gap funder provides the down payment or equity the hard money lender requires.

Gross Rent Multiplier — Property Price ÷ Annual Gross Rent. A quick way to compare rental properties. Lower GRM is generally better.

A short-term, asset-based loan from a private lender secured by real estate. Higher interest rates (8–15%) and fees, but fast approval (days not weeks). Used by fix-and-flip investors.

A property where the owner owns significantly more than they owe on the mortgage. High-equity owners have more flexibility to accept a discount and still net cash.

The percentage of skip trace queries that return a valid phone number or email. A good hit rate is 60–80% for residential skip traces.

Homeowners Association — an organization in a planned community that enforces rules and collects fees for shared maintenance. HOA dues and rules can impact investment returns.

A physical examination of a property's condition by a licensed inspector. Covers roof, foundation, plumbing, electrical, HVAC, and more. Usually takes 2–4 hours.

A settlement statement listing all charges and credits to both buyer and seller at closing. Replaced by the Closing Disclosure (CD) for most transactions after 2015.

Funds set aside at loan origination to cover monthly interest payments during a construction or rehab project. Protects the borrower from cash flow crunches mid-project.

A hybrid strategy combining a lease (rental agreement) with an option to purchase the property at a predetermined price within a set timeframe. Gives the buyer time to qualify for financing.

A legal claim against a property for unpaid debt. Common types: mortgage lien, tax lien, mechanic's lien, HOA lien. Liens must be paid off or cleared before a clean title transfer.

Latin for 'suit pending' — a notice filed in public records indicating a lawsuit involving the property is in progress. Flags a property as having a legal dispute.

Removing phone numbers belonging to known litigators or attorneys who file TCPA lawsuits against callers. Essential for cold calling campaigns.

Loan-to-Cost — Loan Amount ÷ Total Project Cost. Used by hard money and construction lenders to determine how much they'll lend on a rehab project.

Loan-to-Value — Loan Amount ÷ Property Value. Lenders use this to assess risk. Most conventional lenders require ≤80% LTV.

Maximum Allowable Offer — the highest price an investor should pay for a property. Typically calculated as ARV × 70% − Repair Costs.

Multi-Family Residence — a property with 2+ separate housing units (duplex, triplex, quadplex). 1–4 units is classified as residential; 5+ units is commercial real estate.

Mobile Home Park — a community where residents own their homes but rent the land. Considered by many investors as a high-yield, recession-resistant asset class.

Multiple Listing Service — a shared database of property listings used by real estate agents. Access is typically restricted to licensed agents and brokers.

A property owner who needs to sell quickly, often due to financial distress, divorce, probate, relocation, or deferred maintenance. Willing to accept below-market offers for speed and convenience.

Notice of Election and Demand — used in non-judicial foreclosure states (like Colorado) as the formal start of the foreclosure process. Equivalent to an NOD.

Triple Net Lease — a commercial lease where the tenant pays all property expenses including taxes, insurance, and maintenance in addition to rent. Very passive for landlords.

Notice of Default — a formal notice filed by a lender indicating a borrower is behind on mortgage payments and foreclosure proceedings may begin. A key lead source for pre-foreclosure investing.

Net Operating Income — total annual rental income minus operating expenses (taxes, insurance, maintenance, management). Does not include debt service.

A strategy where the investor takes over marketing a property for the seller and gets paid from the proceeds at closing. No assignment fee required; the investor is added to the title at closing.

Other People's Money — the strategy of using borrowed capital or investor funds rather than your own money to finance deals. Allows scaling without large personal capital.

A property owner whose mailing address is in a different state than the property. These owners are often less emotionally attached and more willing to sell at a discount.

Income from rental properties or limited partnerships in which the taxpayer does not materially participate. Subject to passive activity loss rules limiting how losses can be deducted.

A property for sale that is not listed on the MLS. Sold privately through a network of investors, agents, or wholesalers before going to market.

Proof of Funds — documentation showing a buyer has the cash available to complete a transaction. Required by sellers when making cash offers. Can be a bank statement or letter.

Upfront fees paid to a lender at closing, equal to 1% of the loan amount per point. A hard money lender charging 3 points on a $200,000 loan = $6,000 in origination fees.

A legal document authorizing one person to act on behalf of another. Used in real estate when a buyer or seller cannot be present at closing.

Pay-Per-Click — paid digital advertising (Google Ads, Facebook Ads) where you pay each time someone clicks your ad. Used to generate motivated seller leads online.

The period between the first missed payment and the foreclosure auction or bank takeover. Homeowners in pre-foreclosure are often motivated sellers looking to avoid ruining their credit.

A homeowner who has received a Notice of Default or Notice of Election and Demand, signaling they are behind on mortgage payments. One of the highest-converting lead types.

Loans from private individuals (not institutional lenders) secured by real estate. Terms are negotiable and often more flexible than hard money. Relationships-based lending.

The legal process of administering a deceased person's estate, including distributing assets and settling debts. Probate properties are often distressed and sold by heirs who don't want to manage them.

An inherited property being sold through the probate process. Heirs often want to sell quickly, and the property may be discounted due to deferred maintenance or lack of emotional attachment.

A lawsuit filed to establish clear ownership of a property and remove competing claims. Often needed after purchasing a property at a tax sale or from an estate.

A deed that transfers whatever interest the grantor has in a property — with no warranty of title. Common in family transfers, divorce settlements, and clearing title defects.

Real Estate Owned — a property owned by a bank or lender after an unsuccessful foreclosure auction. Banks are motivated sellers and may accept below-market offers.

The percentage of contacts who respond to a marketing campaign. Direct mail typically yields 0.5–2%, cold calling 5–15% (of those who answer), and SMS 10–20%.

Return on Investment — (Net Profit ÷ Total Investment) × 100. The most basic measure of investment performance.

An IRA that allows investments in alternative assets like real estate, notes, and private equity. Profits grow tax-deferred (traditional) or tax-free (Roth). Complex compliance rules apply.

The seller acts as the lender and the buyer makes payments directly to the seller instead of a bank. Terms are negotiable. Also called 'owner financing' or 'owner carry.'

A market condition where demand exceeds supply, giving sellers the upper hand. Properties sell quickly and often above asking price.

Search Engine Optimization — optimizing a website or content to rank higher in organic search results. A long-term strategy for generating inbound seller leads without ongoing ad spend.

Single Family Residence — a standalone home designed for one family. The most common type of residential investment property.

A court-ordered auction of a foreclosed property. The property is sold to the highest bidder. Risky for investors because properties are often sold as-is with limited inspection time.

The process of locating a person's current contact information (phone, email, address) using public records, data brokers, and online sources.

Sending mass text messages to a list of property owners. Higher open rates than email but heavily regulated by TCPA. Must have proper opt-in/opt-out mechanisms.

Scope of Work — a detailed list of all repairs and renovations needed for a rehab project, used to get contractor bids and estimate total rehab costs.

Short-Term Rental — a property rented on platforms like Airbnb or VRBO for nightly or weekly stays. Can command higher gross income than long-term rentals but with more management intensity.

Acquiring a property 'subject to' the existing mortgage, meaning the seller's loan stays in place and the buyer makes payments without qualifying for a new loan. Requires seller cooperation.

A property owner who owes unpaid property taxes. If unpaid long enough, the government can seize and sell the property at a tax lien or tax deed sale.

Tenancy in Common — a form of co-ownership where two or more people each hold an undivided interest in a property. Each owner can sell or will their share independently.

Legal ownership of a property and the right to use it. A 'clean title' means no liens, disputes, or encumbrances. Title insurance protects against undiscovered title defects.

A review of public records to verify legal ownership and identify any liens, judgments, or encumbrances on a property. Done by a title company or real estate attorney.

Short-term financing (usually 1–5 days) used to fund the A→B purchase in a double close. The lender charges a flat fee (often 1–2%) rather than interest.

A property with no occupants. Vacant homes often deteriorate quickly and owners (especially absentee owners) may be motivated sellers.

A deed in which the seller guarantees they have clear title and the right to sell. Provides the buyer the most legal protection. Standard in arm's-length sales.

Running a lead through multiple data sources sequentially until a result is found. Maximizes hit rate by not stopping at the first provider.

A real estate strategy where an investor gets a property under contract and assigns or sells that contract to another buyer (usually a cash investor) for a fee, without ever taking title.

A hybrid between wholesaling and retailing — buying a property with cash, doing minimal cosmetic work, and listing it on the MLS at near-retail prices. Higher margins than pure wholesale but requires more capital.