Real Estate Investing Glossary

An absentee owner is a property owner whose mailing address does not match the property address — typically an out-of-state landlord, an inheritor who never moved in, or a vacation-home owner. Absentee-owner lists are the bread-and-butter lead source for residential wholesalers.

Absorption rate is the number of months it would take to sell all current inventory at the current pace of sales. Below 4 months = seller's market; 4-6 = balanced; above 6 = buyer's market.

After Repair Value (ARV) is the projected market value of a property after all planned renovations are complete, based on recently-sold comparable properties in similar condition within a half-mile radius. It is the single most important number in any flip or BRRRR underwrite.

An assignment fee is the amount a wholesaler is paid for assigning the rights of a real estate purchase contract to an end buyer. Typical fees in 2026 range from $5,000 to $25,000 on single-family deals, depending on the spread and the market.

Bonus depreciation lets investors deduct a portion of qualifying property costs in the first year instead of over the asset's useful life. In 2026, the bonus rate is 60% (down from 100% in 2017-2022), phasing to 0% by 2027 without congressional action.

A bridge loan is short-term financing (6-24 months) used to acquire a property before permanent financing is in place. Common in flips, BRRRRs during the rehab phase, and acquisitions where the buyer needs to close fast and refi later.

A Broker Price Opinion (BPO) is a property valuation conducted by a licensed real estate agent — less rigorous and cheaper than a full appraisal. Lenders use BPOs in short sales, REO (real-estate-owned) decisions, and loss-mitigation workflows.

BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a real-estate investing strategy where an investor buys a distressed property cheap, renovates it, rents it out, refinances at the improved appraisal to recover most or all of the original capital, then repeats the process with the recovered capital.

A buyers list is a wholesaler's curated database of cash buyers (investors, flippers, landlords) who can close on wholesale contracts quickly. Building and maintaining a strong buyers list is the single highest-leverage activity for any wholesaler — without buyers, contracts are worthless.

CapEx is the budget set aside for major property components with finite lifespans — roof, HVAC, water heater, appliances, exterior paint. CapEx differs from maintenance (which covers ongoing repairs) and is a critical line in any honest rental underwrite.

Capitalization Rate (cap rate) is a property's annual NOI divided by its purchase price (or current market value), expressed as a percentage. It's an unlevered yield metric — the return an all-cash buyer would earn before financing.

A cash buyer is an investor who can close on a wholesale or off-market deal without relying on traditional bank financing — typically using actual cash, hard money, private lender funds, or HELOC proceeds. Cash buyers are the demand side of wholesaling and the most important relationship in the business.

A cash buyers list is a wholesaler's curated database of vetted investors who can close on wholesale contracts without traditional financing. Building and segmenting this list is the single highest-leverage activity in a wholesaling business.

Cash-on-cash return is annual pre-tax cash flow divided by the total cash the investor put into the deal (down payment + closing + rehab + reserves). Unlike cap rate, it accounts for financing. The most useful metric for comparing leveraged investments.

A cash-out refinance is a mortgage refinance for more than the existing loan balance, with the difference paid to the borrower in cash. Used by BRRRR investors to recover capital after stabilizing a rental property, by long-term holders to access appreciated equity.

Closing costs are the fees paid at the closing table to complete a real estate transaction — title insurance, lender fees, recording fees, transfer taxes, prepaid escrows, and attorney fees. Typically 2-4% of purchase price for buyers, 1-3% for sellers.

A clouded title is one with an unresolved claim, lien, or defect that calls ownership into question — judgment liens, missing heirs, contested boundaries, or other encumbrances that need to be cleared before a property can be sold with marketable title.

Cold calling is the practice of phoning property owners (typically pulled from an absentee or distress list, with phone numbers from skip trace) to generate seller leads. Used either as a primary channel or as a follow-up layer on direct-mail campaigns.

Comparable sales (comps) are recently-sold properties similar to a subject property, used to estimate market value. A defensible comp set has three to five sales in the last 90 days within a half-mile, matched on bedrooms, bathrooms, square footage (±20%), age (±10 years), and condition.

Cost segregation is a tax strategy that breaks a real estate purchase into shorter-lived components (5-year personal property, 15-year land improvements) to accelerate depreciation. Often produces 20-40% additional first-year tax deductions vs straight 27.5-year depreciation.

Creative finance is the family of non-conventional real-estate transaction structures — subject-to, seller financing, wraparound mortgages, lease options, land contracts. Used when conventional financing doesn't fit the deal or when the seller has motivation to preserve a below-market loan.

Debt Service Coverage Ratio (DSCR) is the ratio of a property's annual net operating income to its annual debt service. A DSCR of 1.20 means the property generates 20% more income than it needs to cover the loan payment. Most DSCR lenders require 1.10-1.25 to underwrite.

Depreciation is the annual non-cash tax deduction allowed against rental property income — residential is depreciated over 27.5 years, commercial over 39. It reduces taxable income without reducing cash flow, the single largest tax advantage of rental real estate.

Direct mail is the practice of sending physical mail (postcards, letters, yellow letters) to property owners to generate inbound calls about selling. Despite the rise of digital channels, direct mail remains the dominant lead-generation channel for residential wholesalers in 2026.

A distressed property is one whose owner is in financial, legal, or physical distress that motivates a below-market sale — pre-foreclosure, divorce, inheritance, code violations, hoarder conditions, or major deferred maintenance. The core inventory pool for wholesalers and value-add investors.

A double close (also called a simultaneous close) is a wholesaling exit where the wholesaler actually buys the property from the seller and immediately resells to the end buyer in two back-to-back transactions. Used when an assignment isn't allowed or when the wholesaler wants to hide their margin.

A DSCR loan is a non-QM investment-property mortgage underwritten primarily on the subject property's cash flow (Debt Service Coverage Ratio) rather than the borrower's personal income. The workhorse loan for BRRRR refis and small-multifamily acquisitions.

Earnest money is the deposit a buyer puts down at contract execution to demonstrate commitment. In wholesale deals, EMDs typically range from $10 to $1,000 — far smaller than retail. The EMD goes toward closing costs at closing, or to the seller if the buyer defaults.

The eviction process is the legal procedure by which a landlord regains possession of a property from a non-paying or lease-violating tenant. Process varies dramatically by state: 30-45 days in Texas/Georgia/Florida, 60-90 days in Ohio/Indiana, 6-12 months in California/New York.

The Fair Housing Act is the federal law prohibiting discrimination in renting, selling, or financing housing based on race, color, religion, sex, national origin, familial status, or disability. State and local laws often add protected classes (source of income, sexual orientation, age).

An FHA loan is a residential mortgage insured by the Federal Housing Administration, allowing 3.5% down payments and 580+ credit scores. For investors, the relevant detail is that FHA loans are assumable — a buyer can take over the original borrower's rate and terms.

A foreclosure auction is the public sale of a foreclosed property to the highest bidder, conducted by either a court-appointed officer (judicial states) or a trustee (non-judicial states). Properties typically sell for the loan payoff balance or below, with cash payment required same-day or next-day.

A "free-and-clear" property is one with no recorded mortgage or other secured debt — the owner holds the deed without lender claims against it. Free-and-clear owners have maximum flexibility in deal structures and are the highest-value targets for creative-finance and cash-purchase offers.

The Garn-St. Germain Depository Institutions Act of 1982 is the federal law that prevents lenders from enforcing due-on-sale clauses in certain enumerated situations — including transfers to a revocable trust where the borrower remains a beneficiary.

Gross rent yield is annual gross rent divided by the property's purchase price (or current value), expressed as a percentage. It ignores operating expenses and is used as a quick first-pass screening metric. A 6% gross yield is roughly the floor for a viable rental in most US markets in 2026.

A hard-money loan is a short-term, asset-based loan used by investors to acquire and renovate properties — typically 6-18 month terms at 9-13% interest with 2-4 origination points. Used when conventional financing doesn't fit (speed, condition, or borrower qualification).

Flipping is the strategy of buying a distressed property, renovating it to retail standard, and reselling at full market value within 4-9 months. Profit comes from the spread between all-in cost (purchase + rehab + carry + closing) and net sale proceeds.

An inspection period (also called due diligence period or feasibility period) is a contractual window — typically 7-14 days — during which a buyer can cancel a purchase contract without penalty and recover earnest money. The wholesaler's primary tool for risk-free deal control.

An inspection period (also called due diligence period or feasibility period) is a contractual window — typically 7-14 days — during which a buyer can cancel a purchase contract without penalty and recover earnest money. The wholesaler's primary tool for risk-free deal control.

A land contract (also called a contract for deed) is a seller-financing structure where the seller retains legal title while the buyer makes installment payments and gets equitable title. Legal title transfers when the contract is paid in full.

A land trust is a legal entity that holds title to real estate on behalf of a beneficiary, with a trustee managing the property per the trust agreement. Used by investors for privacy, asset protection, and as a workaround for due-on-sale clauses on subject-to deals.

A lis pendens (Latin for "suit pending") is a public legal notice filed with the county recorder warning that a lawsuit affecting the title to a specific property is in progress. For investors, the most common type is a foreclosure lis pendens — the first public signal that a property is heading to auction.

Loan-to-value ratio (LTV) is the loan amount divided by the property's appraised value, expressed as a percentage. LTV drives lender pricing, down payment requirements, and PMI thresholds. Lower LTV = lower risk to lender = better rates and terms.

Maximum Allowable Offer (MAO) is the highest price a wholesaler or flipper can pay for a property and still hit their required profit margin. Derived from the 70% rule: MAO = (ARV × 0.70) − repair costs − assignment fee.

The Metro Deal Report Investor Score is a 0-100 composite ranking of US real estate metros, combining rent yield (40%), buyer-market discount via sale-to-list ratio (30%), motivated-seller proxies via percent of homes sold below list (20%), and median days-on-market (10%).

Net Operating Income (NOI) is a rental property's annual gross rental income minus all operating expenses, before debt service and income taxes. NOI is the denominator of cap rate and the numerator of DSCR — it's the most-used number in rental underwriting.

A Notice of Default (NOD) is the formal first step in non-judicial foreclosure states — recorded by the lender when a borrower has missed payments for typically 90+ days. The NOD starts the public foreclosure clock and is one of the highest-quality off-market lead signals available to investors.

A novation is a three-party contract that replaces the original buyer (the wholesaler) with a new buyer (the end investor), with the seller's explicit consent. Used as an alternative to assignment in states with restrictive wholesale-assignment laws.

An option fee is a non-refundable payment a wholesaler makes to a seller for the exclusive right to buy a property within a specified period (typically 30-90 days). Different from earnest money — the option fee buys time, not commitment to close.

Property Assessed Clean Energy (PACE) financing funds energy-efficiency or resilience improvements (solar, HVAC, hurricane shutters) via a special assessment added to property taxes, repaid over 10-20 years. Transfers with the property — affects buyer financing and required disclosure.

PITI stands for Principal, Interest, Taxes, and Insurance — the four components of a typical mortgage payment. PITI is the total monthly housing cost most lenders use for DTI calculations, and the number rental cash-flow analyses subtract from gross rent.

A pre-foreclosure property is one whose owner has fallen behind on mortgage payments and entered the formal foreclosure process, but has not yet been sold at auction. The window from initial filing to auction is typically 6-18 months depending on state — the prime window for investor outreach.

A private lender is a non-institutional individual or small company that lends money on real estate deals — typically friends, family, or local high-net-worth individuals deploying their own capital. Less regulated and more flexible than hard money or institutional lenders.

A private money lender is an individual or small entity that lends investor capital secured by real estate — friends, family, country-club connections, or accredited investors looking for higher yields than bonds. Less regulated than institutional lenders, more flexible on terms.

Property management is the third-party service of leasing, collecting rent, handling repairs, and managing tenant relationships on a landlord's behalf. Typical cost in 2026: 8-10% of monthly rent collected, plus a leasing fee of 50-100% of one month's rent on new tenants.

A quiet title action is a court proceeding to resolve disputed claims to real estate and establish clear, marketable title. Used to clear clouded titles after tax sale purchases, contested estates, missing heirs, or unresolved liens.

Real estate arbitrage is the strategy of leasing a property long-term from an owner and subletting it short-term (Airbnb / Vrbo) for a spread. The arbitrageur doesn't own the property — they're renting and re-renting at a higher rate.

Real Estate Professional Status (REPS) is an IRS designation that lets qualifying taxpayers offset W-2 income with rental losses (depreciation, mortgage interest, etc.). Without REPS, rental losses are passive and can only offset passive income.

A transfer tax is charged by state or local government when real estate changes hands, paid at closing — typically 0.1-2% of sale price. Rates vary dramatically: Texas and Mississippi have no transfer tax; Pennsylvania charges 2%+ in many counties.

A redemption period is a state-mandated window after a foreclosure or tax sale during which the original owner can recover the property by paying off the debt plus costs. Periods range from zero (Texas, Georgia) to one year (Michigan, Iowa).

A rehab budget is the line-item plan of construction costs for a flip or BRRRR — typically broken down by trade (demo, framing, plumbing, electrical, drywall, paint, flooring, kitchen, baths) and contingency. Rehabs without a written budget consistently run 20-40% over informal estimates.

Seller financing (also called owner financing) is when the property seller acts as the lender — the buyer makes monthly payments directly to the seller instead of a bank. Used when the seller owns free-and-clear, wants ongoing income, or when the buyer can't qualify for traditional financing.

A short sale is the sale of a property for less than the amount owed on the mortgage, with the lender's approval to accept the shortfall and release the lien. Used when the borrower is in default and the property's market value has fallen below the loan balance.

Skip tracing is the process of finding a property owner's current phone numbers, email addresses, and alternate addresses — typically by querying a third-party data service that aggregates public records, credit headers, and proprietary databases.

Sourcing is the discipline of generating motivated-seller leads — direct mail, cold calling, driving for dollars, pre-foreclosure lists, probate filings. Every wholesale and BRRRR business is fundamentally a sourcing operation; the rest is execution.

A sub2-to-novation is a creative-finance structure where the investor first takes a property subject-to the existing mortgage, then converts it to a novation with the existing lender by negotiating a loan modification or assumption.

A "subject-to" deal is when an investor buys a property and takes title, while leaving the seller's existing mortgage in place — the investor makes payments on the seller's loan. Used to acquire properties with locked-in low rates or when the seller is behind on payments and needs to walk away.

A tax deed is the legal instrument transferring property ownership to the highest bidder at a county tax sale, when an owner has failed to pay property taxes for the required period (typically 2-5 years). Tax deeds extinguish most prior liens including the mortgage in most states.

The Telephone Consumer Protection Act (TCPA) is the federal law restricting unsolicited calls and text messages to consumer cell phones. For REI cold-callers, TCPA exposure is real and meaningful — violations carry $500-1,500 per call/text in statutory damages.

Tenant screening is the process of evaluating prospective renters against credit, income, eviction history, and reference checks before signing a lease. Rigorous screening is the single highest-leverage activity in landlord operations — bad tenants destroy returns, good tenants compound them.

The 70% rule is a flipper's underwriting heuristic: total all-in cost (purchase + rehab + carry + closing) should not exceed 70% of the property's After Repair Value. The remaining 30% covers profit, slippage, and the cost of being wrong.

Title insurance is a one-time policy paid at closing that protects against losses from defects in the property's title — undiscovered liens, errors in public records, forgery, undisclosed heirs. Required by lenders and prudent for cash buyers.

Transactional funding is a short-term loan — typically lasting hours, not days — used to fund the A-to-B leg of a double close. The wholesaler borrows from the transactional lender to close with the seller, then immediately resells to the end buyer and repays the loan from those proceeds.

Vacancy rate is the percentage of time a rental property is unoccupied and not generating rent, expressed annually. National average sits around 6-8% for single-family rentals in 2026, but varies meaningfully by market and unit quality.

Wholesaling is the real-estate strategy of putting a distressed property under purchase contract and assigning that contract to a cash buyer for a fee. The wholesaler never owns the property — they're paid for connecting motivated sellers to investor buyers.

A wraparound mortgage ("wrap") is seller financing structured on top of (wrapping) the seller's existing mortgage. The buyer pays the seller; the seller continues paying their own mortgage. The wrap rate is higher than the underlying rate, and the spread is the seller's profit.

The Zillow Home Value Index (ZHVI) is a smoothed, seasonally-adjusted measure of typical home value for a given geography (zip, city, metro, state). It captures the value of a "typical" home in the 35th-65th percentile range — a more stable indicator than median sale price.

The Zillow Observed Rent Index (ZORI) measures the typical asking rent for a given geography, updated monthly. Unlike a simple median, ZORI is repeat-rent indexed — it tracks rent changes on the same units over time rather than just the mix of currently-listed rentals.