Understanding investor lingo can be like talking to a doctor about an advanced medical procedure and not understanding the language of an investor can not only confuse you but also make you feel a bit shy. If you ever find yourself at an investor networking event, you’ll hear everything from ARV to LTV and LTC, it can all be very overwhelming to say the least.
That is why we’ve established a resource that will allow you to sharpen your investor lingo and sound like a seasoned pro.
Take a quick read and we are more than confident that you’ll be speaking fluent investor language in no time!
A
ARM
Adjustable Rate Mortgage, there are a lot of Myth’s to these loans, if you’re curious, ask us and we’d be happy to bust them!
Adjustable Rate Mortgage, there are a lot of Myth’s to these loans, if you’re curious, ask us and we’d be happy to bust them!
ARV
After Repair Value, what the is property going to be worth after it is renovated
After Repair Value, what the is property going to be worth after it is renovated
AS-IS Value
The value of the property in its current state before it is renovated
The value of the property in its current state before it is renovated
Appraisal
Assess the value of a property that lenders utilize for determining the loan amount
Assess the value of a property that lenders utilize for determining the loan amount
Assignment Fee
The fee the wholesaler collects by assigning their contract to the end (investor) buyer. Typical example is wholesaler signs contact to buy house from Seller for X amount then turns around and “assigns” (sells for a lack of better terms) the contract to end (investor) buyer for X + their Assignment fee amount.
The fee the wholesaler collects by assigning their contract to the end (investor) buyer. Typical example is wholesaler signs contact to buy house from Seller for X amount then turns around and “assigns” (sells for a lack of better terms) the contract to end (investor) buyer for X + their Assignment fee amount.
B
Bird Dog
Someone who finds leads/deals for wholesalers
Someone who finds leads/deals for wholesalers
C
CTC
Clear To Close aka Final Approval
Clear To Close aka Final Approval
Carrying Costs
Refers to the expenses incurred from the time a property is acquired until the time it is sold which includes any and all loan payments, home owners insurance, property taxes and home owners association fees (if applicable).
Refers to the expenses incurred from the time a property is acquired until the time it is sold which includes any and all loan payments, home owners insurance, property taxes and home owners association fees (if applicable).
Conditional Approval
The Approval right before the Final Approval in that it lets all parties know the subject loan is Approved based upon the following Conditions.
The Approval right before the Final Approval in that it lets all parties know the subject loan is Approved based upon the following Conditions.
Conventional Loans, Portfolio Loans, FHA & VA Loans
Long Term Traditional Government backed loans
Long Term Traditional Government backed loans
Comps
Comps is short for Comparables as in what other properties are comparable to the subject property as you want to compare Apples to Apples when it comes to real estate.
Comps is short for Comparables as in what other properties are comparable to the subject property as you want to compare Apples to Apples when it comes to real estate.
D
DOM
Days on Market, how many Days on Market will it take before the property sells
Days on Market, how many Days on Market will it take before the property sells
DTI
Debt To Income (ratio). What are your Debts To Your Income as a % Ratio. DTI is used for traditional long term loan (Conventional, FHA, VA, etc) underwriting as a percentage of your income not to be exceeded, typically <45%-50%.
Debt To Income (ratio). What are your Debts To Your Income as a % Ratio. DTI is used for traditional long term loan (Conventional, FHA, VA, etc) underwriting as a percentage of your income not to be exceeded, typically <45%-50%.
Deed of Trust
Legal document that pledges the property as security/collateral for the loan and is transferred to a trustee which holds it as a security between the borrower and lender (title remains in the borrowers name).
Legal document that pledges the property as security/collateral for the loan and is transferred to a trustee which holds it as a security between the borrower and lender (title remains in the borrowers name).
Delta
Difference between, most often used when discussing numbers
Difference between, most often used when discussing numbers
Double-Close
Simultaneous closing that typically happens between 3 parties, 1) the original seller to 2) the new owner and then from2) the new owner to 3) the new buyer. Most often used during wholesale real estate transactions.
Simultaneous closing that typically happens between 3 parties, 1) the original seller to 2) the new owner and then from2) the new owner to 3) the new buyer. Most often used during wholesale real estate transactions.
Duplex
2 unit property
2 unit property
E
F
Fire-Sell
Similar to Liquidate, the term fire-sell is used when selling a property fast, usually at a lower price
Similar to Liquidate, the term fire-sell is used when selling a property fast, usually at a lower price
Foreclosure
Our definition: the ATOMIC BOMB of credit, avoid by all means possible. Google definition: the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.
Our definition: the ATOMIC BOMB of credit, avoid by all means possible. Google definition: the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.
Fourplex
4 unit property
4 unit property
G
H
HELOC
Home equity line of credit
Home equity line of credit
HOI
Home Owners Insurance
Home Owners Insurance
HUD-1
AKA Closing Statement is a standard form (still used in Private Lending) used to break down and itemize the fees and services charged to the buyer/new owner of the property.
AKA Closing Statement is a standard form (still used in Private Lending) used to break down and itemize the fees and services charged to the buyer/new owner of the property.
I
I/O
Interest Only, instead of paying Principal & Interest with your monthly payment, you pay Interest Only. Cool perk: I/O loans carry a lower monthly payment.
Interest Only, instead of paying Principal & Interest with your monthly payment, you pay Interest Only. Cool perk: I/O loans carry a lower monthly payment.
J
JV
Joint Venture, similar to partnering on a deal
Joint Venture, similar to partnering on a deal
K
L
LTV
Loan To Value, what is the Loan To (the) Value of the property
Loan To Value, what is the Loan To (the) Value of the property
Liquidate
Similar to Fire-Sell, the term liquidate is typically used when a seller is selling a property fast, often at a lower price
Similar to Fire-Sell, the term liquidate is typically used when a seller is selling a property fast, often at a lower price
Loan Closing
Refers to the signing of the final documentation (usually a date and time) that triggers the transfer of ownership of a property (friendly hint, you’re not quite done at this point, please visit Loan Funding) from one party to another.
Refers to the signing of the final documentation (usually a date and time) that triggers the transfer of ownership of a property (friendly hint, you’re not quite done at this point, please visit Loan Funding) from one party to another.
Loan Funding
This is when the real magic happens and true ownership is transferred when the keys are given to the buyer/new owner as this is when the money actually exchanges hands/accounts via the Title Company.
This is when the real magic happens and true ownership is transferred when the keys are given to the buyer/new owner as this is when the money actually exchanges hands/accounts via the Title Company.
M
N
N/O/O
Non-Owner Occupied property
Non-Owner Occupied property
Non-Arms Length (transaction)
Refers to a real estate transaction in which the Seller and Buyer have an existing relationship (often between family members but not always) with each other. An Arms-Length transaction ensures both the Seller and the Buyer are acting in their own best interests without pressure from one or the other.
Refers to a real estate transaction in which the Seller and Buyer have an existing relationship (often between family members but not always) with each other. An Arms-Length transaction ensures both the Seller and the Buyer are acting in their own best interests without pressure from one or the other.
Non-Recourse Loan
A loan in which there is no recourse against the Guarantor other than confiscating (foreclose) the property. Typically a loan when an IRA is involved and/or multiple partners along with Commercial Lending. Please know that we offer Non-Recourse Loans.
A loan in which there is no recourse against the Guarantor other than confiscating (foreclose) the property. Typically a loan when an IRA is involved and/or multiple partners along with Commercial Lending. Please know that we offer Non-Recourse Loans.
Note (Promissory)
In our opinion this is the most important document you will sign as it is the document you sign that says I promise to… A Promissory Note is a signed document/contract with a written promise to pay an agreed amount of money to a specific person and/or entity at a specified date.
In our opinion this is the most important document you will sign as it is the document you sign that says I promise to… A Promissory Note is a signed document/contract with a written promise to pay an agreed amount of money to a specific person and/or entity at a specified date.
O
O/O
Owner Occupied property
Owner Occupied property
P
PR
Primary Residence property
Primary Residence property
Pre-Approval
Paired with the application stage of the loan process once your lender has reviewed your Income, Assets and Credit to determine your approval status and eligibility.
Paired with the application stage of the loan process once your lender has reviewed your Income, Assets and Credit to determine your approval status and eligibility.
Processing
The gathering and preparing of loan documentation for submission to Underwriting for Final Approval.
The gathering and preparing of loan documentation for submission to Underwriting for Final Approval.
Q
R
REIA
Real Estate Investment Association
Real Estate Investment Association
ROI
Return On Investment, typically calculated as a % and often as a dollar figure amount
Return On Investment, typically calculated as a % and often as a dollar figure amount
Rehab(ilitation) Budget
The cost to rehab & renovate a property, aka Renovation Budget
The cost to rehab & renovate a property, aka Renovation Budget
Renovation Budget
The cost to renovate & rehab a property, aka Rehab Budget
The cost to renovate & rehab a property, aka Rehab Budget
S
SFR
Single family residence
Single family residence
SOW
Scope of Work, the agreed upon renovations described by the Contractor of the work that will be performed on the property. A SOW should have milestones and reports along with a time line for the work performed.
Scope of Work, the agreed upon renovations described by the Contractor of the work that will be performed on the property. A SOW should have milestones and reports along with a time line for the work performed.
Seasoning of Funds
Length/how long have these funds/money been in your account(s).
Length/how long have these funds/money been in your account(s).
Secure Credit Cards
Most credit cards are unsecured as there is no collateral, in the case of Secure Credit Cards an applicant/borrower will pledge a certain amount of money upfront (as collateral) in order to obtain approval. Secure Credit Cards are most commonly obtained by those who have current or previous credit challenges as a way to not only acquire new credit but to re-establish their credit for both current and future purposes.
Most credit cards are unsecured as there is no collateral, in the case of Secure Credit Cards an applicant/borrower will pledge a certain amount of money upfront (as collateral) in order to obtain approval. Secure Credit Cards are most commonly obtained by those who have current or previous credit challenges as a way to not only acquire new credit but to re-establish their credit for both current and future purposes.
Short-Sale
The sale of a property in which the sales price is less than amount owed on the current mortgage, selling a house short of its current mortgage loan balance.
The sale of a property in which the sales price is less than amount owed on the current mortgage, selling a house short of its current mortgage loan balance.
Source/Sourcing of Funds
Where the funds/money that are either in the subject account or being brought to closing coming from.
Where the funds/money that are either in the subject account or being brought to closing coming from.
Subject To
Similar to a Wrap-Around-Mortgage you are buying a property Subject-To the pre-existing (mortgage) financing. Said another way, you take over the already existing mortgage loan and simply transfer Title to your name.
Similar to a Wrap-Around-Mortgage you are buying a property Subject-To the pre-existing (mortgage) financing. Said another way, you take over the already existing mortgage loan and simply transfer Title to your name.
Survey
The plot/geographical area of a property that outlines and defines its proper borders and boundaries. It is extremely important to obtain an accurate Survey as you want to ensure the property you are buying is properly defined and there are no unexpected surprises later, i.e., incorrect fence line, city encroachments, unidentified power lines and many more. Could you imagine buying a property only to find out after closing that a portion of the backyard belongs to a neighbor?
The plot/geographical area of a property that outlines and defines its proper borders and boundaries. It is extremely important to obtain an accurate Survey as you want to ensure the property you are buying is properly defined and there are no unexpected surprises later, i.e., incorrect fence line, city encroachments, unidentified power lines and many more. Could you imagine buying a property only to find out after closing that a portion of the backyard belongs to a neighbor?
T
Title Insurance
A 3rd Party service paid for at closing that protects the Buyer and Lender from any previous liens and/or judgments on Title (of the property) that would have to be paid for at a later date. These liens could range from unpaid back property taxes by the previous owner to them not paying the roofer for repairs made years ago to past due Home Owners Association bills. The last thing you want is to pay and/or deal with an expense after closing, especially one that does not belong to you.
A 3rd Party service paid for at closing that protects the Buyer and Lender from any previous liens and/or judgments on Title (of the property) that would have to be paid for at a later date. These liens could range from unpaid back property taxes by the previous owner to them not paying the roofer for repairs made years ago to past due Home Owners Association bills. The last thing you want is to pay and/or deal with an expense after closing, especially one that does not belong to you.
Title Seasoning
Length/how long has the current owner been on Title of the house. Typical challenges are when the seller has owned the property for less than 90 days and wants to sell it or when the owner has owned the property for less than 180 days and wants to cash out the available equity based on the appraised value.
Length/how long has the current owner been on Title of the house. Typical challenges are when the seller has owned the property for less than 90 days and wants to sell it or when the owner has owned the property for less than 180 days and wants to cash out the available equity based on the appraised value.
Triplex
3 unit property
3 unit property
U
U/W
Underwriting = sign and accept liability
Underwriting = sign and accept liability
V
W
Warranty Deed
Deed that guarantees a clear title to the new buyer of the property.
Deed that guarantees a clear title to the new buyer of the property.
Wrap Around Mortgage
Similar to a Subject-To (loan/financing) you are buying a property by wrapping your financing around the current owners pre-existing financing. Said another way, you take over the already existing mortgage loan and simply transfer Title to your name.
Similar to a Subject-To (loan/financing) you are buying a property by wrapping your financing around the current owners pre-existing financing. Said another way, you take over the already existing mortgage loan and simply transfer Title to your name.
