The terms, plainly defined.
Every term we use across our programs, guides, and calculators, in plain English.
After-Repair Value (ARV)
The estimated market value of a property after planned renovations are complete. Lenders size fix-and-flip and BRRRR loans off ARV, and the 70% rule uses it to set a maximum offer.
Amortization
The schedule by which a loan is paid down over time. A 30-year amortization spreads principal and interest across 360 monthly payments, even if the loan has a shorter term or a balloon.
Bridge Loan
Short-term financing that 'bridges' a gap, for example buying a new property before selling another, or holding an asset while you reposition it for permanent financing.
BRRRR
Buy, Rehab, Rent, Refinance, Repeat. A strategy where you force value through renovation, refinance based on the higher value to recover your capital, and roll it into the next deal.
Cap Rate
Capitalization rate: a property's net operating income divided by its price, expressed as a percentage. The unlevered yield, used to compare rentals independent of financing.
Cash-on-Cash Return
Annual pre-tax cash flow divided by the actual cash you invested. Unlike cap rate, it reflects your financing and down payment.
Cash-Out Refinance
Replacing an existing loan with a larger one and taking the difference in cash. The proceeds are generally not taxable because they are debt, not income; confirm with your tax advisor.
Debt-Service Coverage Ratio (DSCR)
A rental's monthly rent divided by its full monthly payment (principal, interest, taxes, insurance, HOA). A DSCR of 1.0 means rent exactly covers the payment; lenders usually want 1.0 or higher.
Draw Schedule
On a rehab or construction loan, the plan for releasing renovation funds in stages as work is completed and inspected, rather than all at once up front.
Hard Money Loan
Short-term, asset-based financing secured by the property rather than the borrower's income. Priced on speed and the deal, typically interest-only, used for flips and bridges.
Interest-Only
A loan where the monthly payment covers only interest, with the full principal due at the end of the term (at sale or refinance). Common on hard money loans.
Loan-to-Cost (LTC)
The loan amount as a percentage of the total project cost (purchase plus rehab). A lender funding 90% LTC covers 90% of your all-in cost.
Loan-to-Value (LTV)
The loan amount as a percentage of the property's value (or ARV). Caps how much you can borrow against a property and how much you can pull out on a refinance.
Net Operating Income (NOI)
A property's effective gross income minus operating expenses, before debt service. The numerator in the cap-rate calculation.
No-Doc / Bank-Statement Loan
A loan that qualifies a borrower on the property's cash flow or bank deposits instead of tax returns and W-2 income. Useful for self-employed investors.
Points
An up-front origination fee expressed as a percentage of the loan. Two points on a $300,000 loan is $6,000, paid regardless of how long you hold the loan.
Portfolio / Blanket Loan
A single loan secured by multiple properties, letting an investor finance or refinance a group of rentals under one instrument instead of many separate loans.
Private Money
Capital from a private lender or fund rather than a bank. Like hard money, it is relationship- and asset-based, often with more flexible, faster decisions.
Proof of Funds (POF)
Documentation showing a buyer has the capital or financing to close. Sellers and wholesalers often require it before accepting an offer.
Seasoning
The length of time you must own a property (or hold funds) before a lender will use its new value or those funds. Affects how soon you can refinance after a rehab.
70% Rule
A flipping guideline: pay no more than 70% of ARV minus rehab costs. It builds in margin for holding costs, selling costs, and profit.
Transactional Funding
Very short-term capital that funds a same-day 'double close,' letting a wholesaler buy and resell a property back-to-back without using their own cash.
Want the deeper version? Read the investor guides or run the numbers with our calculators.
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