Real Estate Investment Glossary

The department or process responsible for finding, negotiating, and securing investment properties/contracts with sellers.

Simulation of human intelligence by machines. In real estate, AI analyzes vast amounts of data to predict market trends, value properties, and identify investment opportunities.

The estimated value of a property after all necessary repairs and renovations have been completed. This is a crucial metric for determining the maximum offer price.

A condition in a sales contract stating that the buyer accepts the property in its current condition, without requiring the seller to make any repairs or improvements.

The profit a wholesaler makes by assigning their rights in a purchase contract to an end buyer. It is the difference between the contract price with the seller and the price paid by the buyer.

A software-based tool that uses mathematical modeling and databases of existing properties and search trends to calculate the estimated value of a property.

A short-term loan used until a person or company secures permanent financing or removes an existing obligation.

An evaluation of a home's value based on similar, recently sold properties (comps) in the same area.

Fees associated with finalizing a real estate transaction, including title insurance, recording fees, attorney fees, and transfer taxes.

Recently sold properties in the same area with similar characteristics (size, condition, age) used to determine the current market value or ARV of a subject property.

The process of transferring the rights and obligations of a purchase agreement from the original buyer (wholesaler) to a new buyer (end investor).

A field of AI that enables computers to interpret and understand visual information from the world. In real estate, it detects property condition, finishes, and necessary repairs from photos.

The process of selling or assigning a contracted property to an end buyer. The disposition team manages the buyers list and marketing of the deal.

A strategy where a wholesaler actually purchases the property from the seller and then immediately sells it to the end buyer in two separate transactions, keeping the spread.

The practice of driving through neighborhoods to locate distressed properties (e.g., overgrown grass, boarded windows) to find potential investment deals.

A type of loan for real estate investors where approval is based on the property's rental income rather than the borrower's personal income.

A good faith deposit made by a buyer to demonstrate their serious intent to purchase the property. It is typically held in escrow.

The difference between the current market value of a property and the amount owed on any mortgages or liens.

A neutral third-party account where funds and documents are held during a real estate transaction until all conditions are met for closing.

A property sold directly by the owner without the representation of a real estate agent, often to save on commission fees.

The difference between the revenue and cost of goods sold, or in wholesaling, the difference between the purchase price and the sales price.

A private lender who provides short-term, high-interest loans based on the value of the property (asset-based) rather than the borrower's creditworthiness.

A specified timeframe in a contract during which the buyer can inspect the property and withdraw from the deal without penalty if issues are found.

The process of identifying and cultivating potential customers (sellers or buyers) for a business's products or services.

A financial ratio comparing the loan amount to the appraised value of the property. Lenders use it to assess risk.

The highest price an investor can pay for a property while still achieving their desired profit margin. Typically calculated as: (ARV x 70%) - Repairs.

A database established by cooperating real estate brokers to provide data about properties for sale. Access is usually restricted to licensed agents.

A property owner who is eager or desperate to sell quickly, often due to financial distress, divorce, inheritance, or job relocation.

A document (e.g., bank statement, letter of credit) showing that a buyer has the liquid assets necessary to complete a purchase.

The legal process of distributing a deceased person's assets. Real estate investors often find deals by marketing to heirs of properties in probate.

The legal contract between a buyer and seller outlining the terms and conditions of the property sale.

A company that owns, operates, or finances income-generating real estate. Investors can buy shares in a REIT similar to stocks.

A performance measure used to evaluate the efficiency of an investment, calculated as (Net Profit / Cost of Investment) x 100.

The process of locating a person's whereabouts, typically used by investors to find contact information (phone numbers, emails) for property owners.

A creative financing strategy where a buyer purchases a property subject to the existing mortgage, taking over payments without formally assuming the loan.

An examination of public records to determine the legal ownership of a property and identify any liens, encumbrances, or defects in the title.

The practice of contracting a property with a seller at a discount and assigning the contract to an end buyer for a higher price, profiting from the spread.