A
Accredited Investor
An SEC designation: $200K solo / $300K joint income for two years, or $1M net worth excluding primary home.
After Repair Value (ARV)
The market value of a property after planned renovations are completed.
Amortization
The gradual repayment of loan principal over time, alongside interest.
B
Boot
Cash or debt reduction received in a 1031 exchange that isn't reinvested — taxable in the year received.
See also: 1031 Exchange
BRRRR
Buy, Rehab, Rent, Refinance, Repeat — a strategy for recycling capital across multiple properties.
In plain English: Pull your money back out so you can do it again.
C
Cap Rate
Net Operating Income divided by purchase price. A measure of unlevered yield.
CapEx
Capital expenditures — large, infrequent expenses like a new roof or HVAC.
Cash Flow
Net income after operating expenses and debt service.
Cash-on-Cash Return
Annual pre-tax cash flow divided by total cash invested.
Closing Costs
Fees paid at the closing of a real estate transaction (title, escrow, lender fees, etc.).
D
Debt Service
The total cash required to cover principal and interest on a loan in a given period.
Delaware Statutory Trust (DST)
A legal entity that holds investment real estate, eligible for 1031 exchanges, with fractional ownership.
Depreciation
A non-cash tax deduction representing wear on the building over its useful life (27.5 years residential).
DSCR
Debt Service Coverage Ratio. NOI ÷ annual debt service. Lenders typically require 1.25+.
E
Equity Multiple
Total cash received divided by total cash invested. A 2.0x means you got back twice what you put in.
Exit Strategy
The planned method of closing out a position — sale, refinance, 1031, or 721 exchange.
G
GP (General Partner)
The active operator who sources, finances, and manages a deal. Bears unlimited liability.
Gross Yield
Annual rent divided by purchase price, before expenses.
H
Hard Money Loan
A short-term, asset-based loan from a private lender, used for acquisition and rehab.
Hold Period
The planned length of time you'll own a position.
I
IRR
Internal Rate of Return — the annualized return accounting for the timing of all cash flows.
K
K-1
The annual tax document issued to LPs in a partnership, reporting their share of income, losses, and credits.
L
Like-Kind Exchange
Any U.S. investment real estate exchanged for any other U.S. investment real estate.
LP (Limited Partner)
A passive investor in a syndication or partnership, with limited liability and no operational role.
LTV
Loan-to-Value — loan amount divided by property value.
N
Negative Leverage
When the cap rate is lower than the interest rate — borrowing actually reduces returns.
NOI
Net Operating Income — gross income minus operating expenses, before debt service.
P
Passive Income
Income from a trade or business in which the investor does not materially participate.
PPM
Private Placement Memorandum — the disclosure document for a securities offering.
Preferred Return
A return paid to LPs before the GP receives promoted interest — typically 6–8%.
Principal
The amount of money owed on a loan, separate from interest.
Q
QI
Qualified Intermediary — the third party that holds 1031 proceeds between sale and purchase.
R
Refinance
Replacing an existing loan with a new one, usually to extract equity or improve terms.
REIT
Real Estate Investment Trust — a publicly or privately traded entity that owns income real estate.
Repositioning
A value-add strategy of renovating, re-tenanting, or rebranding a property to increase NOI.
S
SPV
Special Purpose Vehicle — an LLC formed for a single deal to isolate liability.
Stepped-Up Basis
When heirs inherit property, the basis resets to fair market value at death — erasing deferred gains.
Syndication
A pooled investment structure where many LPs co-invest under one GP.
V
Vacancy Rate
The percentage of time a unit is unoccupied — applied to gross rent to estimate effective income.
Value-Add
An investment strategy targeting properties where NOI can be materially improved through operations or capex.
W
Waterfall
The distribution structure of a syndication, defining how cash flows are split between LPs and GP at each return tier.