Real Estate Investing Terms Explained

The 70% rule states that real estate investors should pay no more than 70% of a property's ARV minus repair costs. It's a quick screening formula for house flippers and wholesalers: if ARV is $200K and repairs are $30K, the maximum offer is $200K × 0.70 − $30K = $110K.

ARV, or after-repair value, is the estimated market value of a property after the planned repairs and updates are complete. Investors use it to estimate a resale ceiling. ARV is not the seller's asking price, an automated guess, or the value of a house in its current condition.

A wholesale assignment fee is the money you earn when you assign your purchase contract to an end buyer. You sell the contract rights, not the deed (in a pure assignment). The fee must sit inside the gap under buyer MAO. Stacking fee on top of MAO is how deals die at the title table.

BRRRR (Buy, Rehab, Rent, Refinance, Repeat) is a real estate investment strategy where investors buy and renovate a distressed property, rent it out, then do a cash-out refinance to recover their initial capital and repeat the process — building a rental portfolio without tying up cash long-term.

Cap rate, short for capitalization rate, compares a property's annual net operating income with its price or current value. It is a quick way for hold investors to compare unlevered property performance. Cap rate does not include the mortgage. It also does not make a wholesale deal work when the ask is above the buyer's MAO.

Cash flow is the money left each month (or year) after you collect rent and pay operating expenses and debt service. Positive cash flow means the property pays you. Negative means you feed it. It is a hold metric. It is not a promise, and it does not replace ask vs MAO on the buy.

Cash on cash return is annual pre-tax cash flow divided by the cash you put in. It answers: for every dollar of my money stuck in this deal, how much cash came back this year? It is a hold metric. It does not replace MAO or ARV when you are screening a wholesale buy.

Comps (comparable sales) are recently sold properties similar to the subject property used to estimate market value or ARV. Good comps share the same zip code, sold within 6 months, have similar square footage (±25%), beds, baths, and property type — they form the foundation of every ARV calculation.

Days on market (DOM) is how long a public listing has been active. Investors read DOM as a liquidity and negotiation signal: longer DOM can mean ask is ready to move. It is not a quality score, not a letter grade, and not a reason to ignore MAO.

A double closing (also called a double close or back-to-back closing) is two closings in sequence: you buy from the seller (A→B), then sell to your end buyer (B→C), often the same day. You show up as the buyer on title for a moment. It is the main alternative to an assignment when the contract cannot be assigned or the buyer will not accept an assi...

Debt service coverage ratio (DSCR) measures how many times a property's net operating income covers its annual loan payments. Lenders and hold investors use it to test debt coverage. A DSCR above 1.00 means NOI is greater than the scheduled debt service in the model. It does not mean the loan is approved, and it does not replace the wholesale ask v...

A hard money loan is short-term, asset-based financing from a private lender. Approval leans on the property and the exit (flip ARV or refinance), not a W-2 story. Points and rates run higher than bank money. It does not fix a file where ask sits over buyer MAO.

MAO, or maximum allowable offer, is the highest price a buyer can pay while leaving room for repairs, resale risk, financing, and the return that buyer needs. In wholesale, MAO is the price gate. A seller's ask can be below ARV and still be above MAO.

Net operating income (NOI) is the money a property produces after normal operating expenses, before mortgage payments and income taxes. It helps a landlord see how the real estate performs on its own. NOI does not tell you whether a wholesale contract is cheap enough. On that question, ask vs MAO still gates the buy.

Section 8 FMR means HUD Fair Market Rent: the published payment-standard rent used for Housing Choice Voucher underwriting. Investors treat FMR as a rent floor for voucher-friendly buy-and-hold. It is not street rent, not ARV, and not a promise of cash flow. DealBeast is not HUD and does not issue vouchers.

Subject to (often "sub-to") means you take title to the property subject to the existing mortgage. The loan usually stays in the seller's name. You make the payments. It can cut cash to close when rates or credit block a new loan. It does not erase due-on-sale risk, and it does not make an over-MAO ask a deal.

Real estate wholesaling is a strategy where an investor contracts a property at a below-market price, then assigns that contract to a cash buyer for an assignment fee — typically $5,000-$25,000 — without ever owning the property. It requires finding motivated sellers and building a buyers list.