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    34 Abbreviations in Single-Family Home Investing

    One of the biggest obstacles for those looking at single-family home investment is one of the easiest to break through, although few realize it. Has the complex jargon around real estate investment kept you from breaking into this growing market? We totally understand!

    Check out 34 of the most common abbreviations and simple definitions in real estate investment and gain ground the ground you need when it comes to single-family home investment concepts!

    34 Real Estate Investing Abbreviations (with some simple definitions)

    ARV – After-Repaired Value

    COO or C of O – Certificate of Occupancy: A certificate of occupancy is a document issued by a local government agency or building department certifying a building’s compliance with applicable building codes and other laws, and indicating it to be in a condition suitable for occupancy.  

    CMA – Comparative Market Analysis: Comparative Market Analysis (CMA) — an estimate of the home’s value compared with others. This differs from an appraisal in that property currently for sale may be taken into consideration. (competition for the subject property)

    COCR or CCR – Cash on Cash Return: In investing, the cash-on-cash return is the ratio of annual before-tax cash flow to the total amount of cash invested, expressed as a percentage.

    COF – Cost of Funds

    CRE – Creative Real Estate

    CRE – Commercial Real Estate

    DCR or DSCR or DSR – The debt service coverage ratio (DSCR), also known as “debt coverage ratio,” (DCR) is the ratio of cash available for debt servicing to interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity’s (person or corporation) ability to produce enough cash to cover its debt (including lease) payments.

    DTI – Debt to Income Ratio: A debt income ratio is the percentage of a consumer’s monthly gross income that goes toward paying debts. (Speaking precisely, DTIs often cover more than just debts; they can include principal, taxes, fees, and insurance premiums as well. Nevertheless, the term is a set phrase that serves as a convenient, well-understood shorthand.)

    FHA – The Federal Housing Administration  is a United States government agency created as part of the National Housing Act of 1934. It sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building. The goals of this organization are to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market.
    FMR – Fair Market Rent is a term in real estate that indicates the amount of money that a given property would command, if it were open for leasing at the moment. The term is primarily used in the United States.

    FMV –Fair market value is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer would probably pay to a knowledgeable, willing, and unpressured seller in the market. An estimate of fair market value may be founded either on precedent or extrapolation.

    FSBO – For Sale by Owner

    GRM – Gross Rent Multiplier is the number of months the property would take to pay for itself in gross received rent. For the investor, a higher GRM (perhaps over 120) is a poorer opportunity, whereas a lower one (perhaps under 80) is better.

    HML –Hard money lenders are lending companies, or individuals, offering a specialized type of collateral backed loan. They tend to lend short-term capital (also called bridge loans) that provide funding and or cash, based on the value of the collateral. Hard money lenders can and will utilize all types of collateral- cars, boats, land, airplanes, hard assets, paintings, etc. to complete the loan.

    HOA – Homeowners Association

    HUD –The United States Department of Housing and Urban Development is a Cabinet department in the Executive branch of the United States federal government.

    IRA –An individual retirement account is a form of “individual retirement plan”,[2] provided by many financial institutions, that provides tax advantages for retirement savings in the United States.

    IRR – The internal rate of return or economic rate of return (ERR) is a rate of return used in capital budgeting to measure and compare the profitability of investments.

    JV – Joint Venture

    L/O – A lease option (more formally Lease with the Option to Purchase) is a type of contract used in both residential and commercial real estate. In a lease-option, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property.

    LTV – The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased.

    MLS – Multiple Listing Service

    NNN – A triple net lease is a net lease, structured as a turnkey investment property in which the tenant is responsible for paying the three major expenses associated with commercial real estate ownership. “NNN” stands for “Net-Net-Net”, is pronounced “Triple Net” and represents the three most common, consequential real estate related expenses: N – Property Tax N – Insurance N – Maintenance

    NOI – Net Operating Income is the difference between operating revenues and operating expenses.

    NOO – Non-Owner Occupied

    OO – Owner Occupied

    REI – Real Estate Investing

    REIA – Real Estate Investors Association

    REO – Real Estate Owned

    ROI – Return on Investment

    RTO – Rent to Own

    SFH – Single Family House

    SFR – Single Family Residence

    VA – Department of Veterans Affairs / Veterans Administration

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