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)
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.
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.
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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Looking to build out more than your knowledge on turnkey property investment in single-family homes? We want to help you take the plunge! Contact IndyREI to get involved in single-family home investment in Indiana!