REI Glossary: Common Real Estate Investment Terms.
Part One of Two. Your A-Z guide for the most common real estate terms.
A – N
ARV – After Repair Value. Real estate investing, especially flipping properties, requires that a purchased distressed property be rehabilitated. The ARV equates to the property’s worth after cosmetic work, repairs, extensive rehab and remodel work.
Bridge Loan – These short-term loans operate the same as cash, and are used to quickly fund the purchase of an investment property.
Cash Flow– The determination of the income generated by a rental investment.
Distressed Property – Real estate that’s priced below market value and therefore very desirable to property investors. Distressed properties are sold quickly for reasons as foreclosure, pre-foreclosure, or a short sale.
Equity – The value of a property after deducting the amount of liabilities owed, if any.
FSBO – For Sale By Owner. The sale of a home without the use of a real estate agent.
Government National Mortgage Association (Ginnie Mae) – Created by Congress on September 1, 1968, GNMA is a government-owned corporation within the U.S. Department of Housing and Urban Development. GNMA provides funds to lenders for home loans. GNMA operates the same as Fannie Mae and Freddie Mac, but GNMA differs by providing funds for government loans such as FHA and VA.
Hard Money Loan – Similar to a bridge loan, a hard money loan is short-term, asset-based financing which a borrower receives from private investors or companies.
Investment Property – Real estate property that’s purchased in order to earn a return on the investment. Investment property can be either long- or short-term, with profit coming from fixing and flipping or fixing and renting the property.
Joint Venture – A contractual agreement that joins together two or more parties to execute a business undertaking with an agreement to share the profits and losses.
Loan Origination Fee – When lenders charge their borrowers an origination fee, or points, for processing a loan.
MLS – Multiple Listing Service. Set up by cooperating real estate brokers, the MLS is a database that provides data about properties for sale.
Net Worth – The calculation of all assets minus all debts.
Don’t forget about P-Z, read part two of our glossary here!
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