Glossary
Real estate investing glossary
Plain-English definitions for the terms investors actually use — with the formulas and examples DealForge uses in the analyzer.
ARV (After Repair Value)
Estimated market value once renovation is complete.
ARV is the projected resale value of a property after all planned repairs and renovations are finished. It anchors flip MAO, BRRRR refinance proceeds, and resale flyer expectations. Defensible ARVs come from recency-weighted comparable sales, not online estimates.
MAO (Maximum Allowable Offer)
The highest price you can pay and still hit your target return.
MAO is the ceiling on your offer. For flips, the 70% rule is the convention; wholesalers subtract an assignment fee on top.
MAO = ARV × 0.70 − Rehab (− Wholesale Fee)
Example: ARV $300,000 × 0.70 = $210,000 − $45,000 rehab = $165,000 MAO.
Related: ARV, Wholesaling, Fix & Flip
BRRRR
Buy, Rehab, Rent, Refinance, Repeat — a capital-recycling strategy.
A long-term rental strategy that uses short-term capital to acquire and stabilize a property, then refinances into permanent debt at the new appraised value, ideally pulling original cash back out.
Cap Rate
Unleveraged annual yield on a rental property.
Capitalization rate compares net operating income to purchase price. It strips out financing so you can compare properties apples-to-apples across markets.
Cap Rate = NOI ÷ Purchase Price
Example: $18,000 NOI ÷ $225,000 price = 8.0% cap rate.
Related: NOI, Cash-on-Cash, DSCR
Cash-on-Cash Return
Annual pre-tax cash flow on actual cash invested.
Unlike cap rate, COC accounts for leverage and captures what your actual capital is earning each year.
COC = Annual Pre-Tax Cash Flow ÷ Total Cash Invested
Example: $6,000 annual cash flow ÷ $50,000 down + closing = 12% COC.
DSCR (Debt Service Coverage Ratio)
Whether the property pays its own mortgage.
Lenders use DSCR to size debt against a property's income. A DSCR of 1.0 means NOI exactly covers annual debt service; 1.25 is a common minimum for DSCR loans.
DSCR = NOI ÷ Annual Debt Service
NOI (Net Operating Income)
Income after operating expenses, before debt service.
NOI is gross rental income minus operating expenses (taxes, insurance, management, repairs, vacancy reserve, capex reserve) — but not mortgage payments.
NOI = Gross Rent − Vacancy − Operating Expenses
LTV (Loan-to-Value)
Loan amount as a percent of property value.
LTV is the lender's risk gauge. Conventional rentals fund at 75–80% LTV; DSCR refis at 70–80%; hard money on purchase + rehab is typically expressed as LTC (loan-to-cost).
LTV = Loan Amount ÷ Appraised Value
LTC (Loan-to-Cost)
Construction or rehab loan as a percent of total project cost.
LTC sizes draw-funded loans against total project cost (purchase + rehab or land + hard + soft). Hard-money lenders typically lend 85–90% LTC for experienced operators.
LTC = Loan Amount ÷ Total Project Cost
Related: LTV, Fix & Flip
GRM (Gross Rent Multiplier)
Price-to-rent quick screen.
GRM is the back-of-napkin metric for screening rentals before a full underwrite. Lower GRMs typically mean better cash flow, though markets vary widely.
GRM = Purchase Price ÷ Annual Gross Rent
Example: $200,000 price ÷ $24,000 annual rent = 8.3 GRM.
Related: Cap Rate
IRR (Internal Rate of Return)
Annualized return across the full hold period, including exit.
IRR is the time-weighted discount rate that sets net present value of all cash flows (including the eventual sale) to zero. It's the right metric for comparing deals with different hold periods.
Related: Cash-on-Cash, Cap Rate
Wholesaling
Assigning a purchase contract to an end buyer for a fee.
Wholesalers contract a property with the seller, then assign the contract to a flipper or landlord at a markup. The wholesaler's profit is the assignment fee, paid at closing.
Section 8 (Housing Choice Voucher)
Federal rental assistance program with HUD-set Payment Standards.
Section 8 vouchers cover a portion of tenant rent up to the local Payment Standard, set by Public Housing Authorities between 90–110% of HUD Fair Market Rent.
Related: Payment Standard, NOI
Payment Standard
Maximum monthly subsidy a PHA will pay for a unit size in an area.
Payment Standards are the rent cap PHAs use to determine the Section 8 voucher amount. Often higher than organic market rent in class-C neighborhoods, making voucher tenants meaningfully more profitable when underwritten correctly.
Related: Section 8
Draw Schedule
Construction-loan funding tied to completed milestones.
Lenders disburse construction or rehab loans in tranches as work is completed and inspected. The draw schedule defines milestones, percentages, and documentation required at each step.
Related: LTC, Fix & Flip
Buy Box
Written criteria defining the deals you'll consider.
A buy box codifies markets, price range, beds/baths, condition, minimum margin, and exit strategy so every inbound lead can be screened consistently.
Related: MAO
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