Practical guides on finding deals, finding buyers, and closing your first wholesale assignment.
Delayed financing is a Fannie Mae exception that lets you buy a property with cash and then take a cash-out refinance right away, instead of waiting the usual six months on title. The catch for investors: the new loan is capped at what you documented paying to buy the property, so it gets your purchase cash back but generally not your rehab money.
The FHA 90-day flip rule says a home cannot be sold to a buyer using an FHA-insured mortgage if the seller signs that sales contract 90 days or fewer after acquiring the property. It also requires the seller to be the owner of record and bars assigned contracts.
A real estate syndication is a deal where one sponsor (the general partner, or GP) finds, buys and runs a property using money pooled from many passive investors (the limited partners, or LPs), usually through an LLC or limited partnership that owns the asset.
An arm’s length transaction is a sale between a buyer and seller who are independent of each other, each acting in their own interest, with no family, business or side-deal connection that could push the price away from market value.
A seller net sheet is a one-page estimate of the cash a homeowner will actually walk away with at closing: the sale price minus the mortgage payoff, liens, taxes, title and escrow charges, commissions, concessions, repairs and the cost of waiting.
Net operating income (NOI) is what a rental property earns in a year after you collect the rent and pay the costs of running it, but before mortgage payments, depreciation and income taxes.
Real estate due diligence is the investigation you run between signing a purchase contract and the deadline when your right to walk away expires: title and liens, physical condition, permits and code history, zoning, flood risk, leases, taxes and insurance.
Absorption rate in real estate is the pace at which available homes sell in a specific market over a set period, usually expressed as a percentage of active listings sold per month. You calculate it by dividing the number of homes sold in a month by the number of homes for sale; 25 sales against 100 listings is a 25% monthly absorption rate.
House hacking means buying a property you live in and renting out part of it, such as the other units of a duplex, a basement apartment, or spare bedrooms, so the rent covers some or all of your housing payment. Because you live there, you can usually finance it with owner-occupant loans that need far less down than an investment property loan.
A balloon payment is a large lump sum due at the end of a loan, paying off whatever principal the regular monthly payments didn’t. In real estate investing it shows up most in seller financing: the payments are calculated as if the loan ran 30 years, but the whole remaining balance comes due in five or seven.