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Intermediate terms

Essential Investment Strategy Terms

This curated collection includes key terms that might be helpful when exploring real estate investment strategies. It focuses on understanding common entry-level investment models and the considerations for picking one to start with. These terms were selected based on common questions and areas where investors often need clarity.

Learning Path

1

Mortgage

A mortgage is a loan obtained from a lender to purchase real estate, where the property itself serves as collateral for the debt. Borrowers make regular payments, including principal and interest, over a set period until the loan is fully repaid.

Beginner15-18 min
2

House Hacking

House hacking is a real estate investment strategy where you live in one unit of a multi-unit property or a portion of a single-family home, and rent out the remaining units or rooms to cover your housing expenses.

Intermediate14-15 min
3

Cash-on-Cash Return

Cash-on-Cash Return (CoC) is a real estate investment metric that calculates the annual pre-tax cash flow generated by a property as a percentage of the total cash an investor has invested.

Intermediate15-18 min
4

Comparative Market Analysis

A Comparative Market Analysis (CMA) is an informal estimate of a property's value based on recently sold, active, and expired listings in the same area, used by real estate professionals to help buyers and sellers determine a competitive price.

Intermediate15-18 min
5

Buy-and-Hold Real Estate Investing

Buy-and-hold real estate investing is a long-term strategy focused on purchasing income-producing properties to generate rental income, benefit from appreciation, and build equity over an extended period.

Intermediate11-12 min
6

Rehabilitation

Real estate rehabilitation is the process of extensively repairing and upgrading a distressed property to restore it to an improved condition, significantly increasing its value and functionality for sale or rent.

Intermediate13-14 min
7

FHA Loan

An FHA loan is a government-insured mortgage backed by the Federal Housing Administration, offering lower down payments and more flexible credit requirements to make homeownership more accessible.

Intermediate15-18 min
8

VA Loan

A mortgage loan guaranteed by the U.S. Department of Veterans Affairs (VA) for eligible service members, veterans, and surviving spouses, offering benefits like no down payment and no private mortgage insurance.

Intermediate12-13 min
9

Capitalization Rate

The Capitalization Rate (Cap Rate) is a real estate valuation metric used to estimate the potential rate of return on an investment property, calculated by dividing its Net Operating Income (NOI) by its current market value.

Intermediate14-15 min
10

BRRRR Method

The BRRRR Method is an advanced real estate investment strategy (Buy, Rehab, Rent, Refinance, Repeat) designed to build a scalable rental property portfolio by leveraging forced appreciation to recycle initial capital for subsequent investments.

Advanced14-15 min
11

Hard Money Loan

A hard money loan is a short-term, asset-backed real estate loan from private lenders, primarily based on the property's value rather than the borrower's credit, used for quick acquisitions or rehab projects.

Intermediate13-14 min
12

Fix-and-Flip

Fix-and-flip is a real estate investment strategy where an investor buys an undervalued property, renovates it to increase its value, and then sells it quickly for a profit.

Beginner11-12 min
13

Net Operating Income

Net Operating Income (NOI) is a key real estate metric representing a property's annual income after deducting all operating expenses, but before accounting for debt service, income taxes, and capital expenditures.

Intermediate11-12 min
14

Due Diligence

Due diligence is the critical process of investigating and verifying all material facts about a property and its financials before a real estate acquisition, aiming to identify risks and ensure an informed investment decision.

Intermediate14-15 min
15

After Repair Value

After Repair Value (ARV) is the estimated market value of a property after all planned renovations and improvements have been completed, crucial for assessing investment profitability.

Intermediate15-18 min
16

Down Payment

A down payment is an initial upfront payment made when purchasing a property, representing a portion of the total purchase price and reducing the amount of money borrowed through a mortgage.

Intermediate15-18 min
17

Rental Property

A rental property is real estate purchased with the intent to generate income through tenant rent payments and potential property value appreciation.

Beginner13-14 min