Intermediate terms

Essential Quick Property Analysis Terms

This curated collection includes key terms that might be helpful when exploring quick property analysis. It focuses on the foundational metrics and rules of thumb used to rapidly assess a potential real estate investment's viability. These terms were selected based on common questions and areas where investors often need clarity.

Learning Path

Operating Expenses

Operating expenses are the ongoing costs of running and maintaining a real estate investment property, excluding mortgage principal and interest payments, and capital expenditures.

Beginner13-14 min

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

Back-of-the-Napkin Math

Back-of-the-Napkin Math involves quick, informal calculations to rapidly assess the initial financial viability of a real estate investment, helping investors efficiently screen properties before committing to detailed analysis.

Beginner5 min

Market Value

Market value in real estate is the most probable price a property should bring in a competitive and open market under all conditions requisite to a fair sale, with the buyer and seller acting prudently, knowledgeably, and typically uninfluenced by undue stimulus.

Beginner15-18 min

Rehab Costs

Rehab costs are all expenses incurred to repair, renovate, or improve a real estate property, directly impacting its value and investment profitability.

Intermediate11-12 min

Sales Comparison Approach

The Sales Comparison Approach (SCA) is a real estate valuation method that estimates a property's value by analyzing recent sales of similar properties and adjusting for differences.

Intermediate14-15 min

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

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

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

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

The 50% Rule

A quick screening tool for real estate investors that estimates operating expenses (excluding mortgage principal and interest) to be 50% of the gross rental income, helping to quickly assess a property's potential profitability.

Beginner14-15 min

Appraisal

An appraisal is an unbiased, professional opinion of a property's market value, conducted by a licensed appraiser, primarily used for lending, buying, and selling decisions.

Intermediate14-15 min

Rehab Budget

A rehab budget is a comprehensive financial plan detailing all anticipated costs for renovating a real estate property, essential for projecting profitability and managing project expenses.

Intermediate15-18 min

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

Maximum Allowable Offer

The Maximum Allowable Offer (MAO) is the highest price a real estate investor can pay for a property while still achieving their target profit after all projected costs.

Intermediate11-12 min