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Glossary

Real estate investing terms, defined.

Plain-English definitions of the concepts, formulas, and strategies every fix-and-flip investor, wholesaler, and landlord needs to know.

Jump to:ValuationDeal AnalysisFinancingStrategyProperty

Valuation

ValuationPopular

ARV (After Repair Value)

The estimated market value of a property after all renovations and repairs have been completed.

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ValuationPopular

Cap Rate (Capitalization Rate)

A metric that measures the annual rate of return on a real estate investment property, calculated by dividing net operating income by property value.

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Valuation

Comparable Sales (Comps)

Recently sold properties similar to a subject property in location, size, condition, and features — used to estimate market value.

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Valuation

Cash on Cash Return

A metric measuring the annual pre-tax cash flow relative to the total cash invested in a property, expressed as a percentage.

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Deal Analysis

Deal AnalysisPopular

MAO (Maximum Allowable Offer)

The highest price an investor should pay for a property to maintain their target profit margin after rehab and resale.

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Deal AnalysisPopular

The 70% Rule

A quick formula used by house flippers to determine the maximum price they should pay for a property: MAO = (ARV × 70%) – Repair Costs.

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Deal Analysis

Rehab Costs (Renovation Costs)

The total estimated cost to renovate a property to its target condition, including materials, labor, permits, and contingencies.

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Deal Analysis

ROI in Real Estate

Return on Investment measures the total profit from a real estate deal relative to the total capital invested, expressed as a percentage.

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Deal Analysis

Deal Analysis

The comprehensive process of evaluating a potential real estate investment by analyzing ARV, rehab costs, financing, holding costs, and projected returns.

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Deal Analysis

Scope of Work (SOW)

A detailed document listing every repair, renovation, and improvement planned for a property, including specifications, materials, and estimated costs.

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Financing

FinancingPopular

Hard Money Loan

A short-term, asset-based loan from private lenders used by real estate investors to fund property purchases and renovations.

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Strategy

StrategyPopular

Fix and Flip

An investment strategy where an investor purchases a distressed property, renovates it, and resells it for a profit — typically within 3–9 months.

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StrategyPopular

Wholesale Real Estate

A strategy where an investor contracts a property at a low price and assigns the contract to another buyer for a fee, without ever taking ownership.

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Property

Property

Subject Property

The specific property being evaluated, appraised, or analyzed in a real estate transaction.

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Property

Distressed Property

A property in poor condition or under financial duress (foreclosure, tax lien, deferred maintenance) that can typically be purchased below market value.

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