Real Estate Investing Glossary: 155 Terms Explained

This real estate investing glossary explains 155 terms that wholesalers and investors run into on real deals, from contracts and title to financing and foreclosure. Each entry gives a plain-English definition and links to a full guide.

Jump to: A · B · C · D · E · F · G · H · I · J · L · M · N · O · P · Q · R · S · T · V · W · Z · Foreclosure by state

A

Absentee Owner Leads: Absentee owner leads are property owners whose tax-bill mailing address is different from the property’s own address, which usually means a landlord, an heir, or someone who moved out and kept the house.

Absorption Rate: 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.

Acceleration Clause: An acceleration clause lets a lender demand the entire remaining loan balance when the borrower defaults or transfers the property without consent.

And/Or Assigns: “And/or assigns” is wording added after the buyer’s name on a real estate purchase contract, such as “Jane Smith and/or assigns,” to show the buyer may transfer the contract to someone else before closing.

Appraisal Contingency: An appraisal contingency lets a buyer renegotiate or cancel and keep their earnest money if the property appraises below an agreed amount.

Arm’s Length Transaction: 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.

Assignment Fee: An assignment fee is what an end buyer pays a wholesaler to take over the wholesaler’s purchase contract.

Assignment of Contract: An assignment of contract in real estate is when the buyer named in a purchase agreement transfers their rights and obligations under that agreement to a new buyer,

Assumable Mortgage: Which FHA, VA and USDA loans an investor can legally assume, how to find them in public records and the MLS, and how to cover the equity gap.

B

Balloon Payment: 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.

Bird Dog Real Estate: A bird dog in real estate finds potential deals and passes the leads to an investor for a fee.

Blanket Mortgage: A blanket mortgage is a single loan secured by two or more properties, so one note and one closing cover a whole group of houses, lots, or buildings.

Bridge Loan Real Estate Guide: A bridge loan in real estate is short-term financing, usually 12 to 36 months, that covers the gap between buying a property and refinancing or selling it.

Broker Price Opinion: A broker price opinion is a broker’s or agent’s written estimate of a property’s likely selling price.

Buy Box: A buy box is the specific set of criteria an investor uses to decide which properties they will buy: location, property type, condition, price, and returns.

Buying a Condemned House: A condemned house is a property a local code official has declared unsafe or unfit to live in.

Buying a Fire Damaged House: A fire damaged house can be one of the best deals in a neighborhood, but only when the price accounts for smoke, water, structural and insurance unknowns.

Buying a House With Asbestos: Buying a house with asbestos is usually a manageable cost, not a deal-killer, if you know what contains it, whether your rehab will disturb it, and what abatement will cost before you set your price.

C

California Foreclosure Timeline: The California foreclosure timeline runs at least seven to eight months from the first missed payment.

Cap Rate: The cap rate in real estate is a property’s annual net operating income divided by its price or value.

Cash for Keys: Cash for keys is a voluntary agreement that pays an occupant to move out by a set date instead of going through an eviction.

Cash on Cash Return: Cash on cash return is the annual pre-tax cash flow a property puts in your pocket divided by the total cash you put into the deal.

Certificate of Occupancy: A certificate of occupancy (CO) is the document a local building department issues to say a building, or part of one, has passed its inspections and may legally be used for a specific purpose.

Chain of Title: The chain of title is the unbroken sequence of recorded documents that moves ownership from one owner to the next.

Chapter 13 Foreclosure: Filing Chapter 13 stops a foreclosure immediately through the automatic stay and gives the homeowner three to five years to catch up.

Cloud on Title: A cloud on title is any recorded document, claim, or record error that casts doubt on ownership.

Code Violation Leads: Code violation leads are property owners who have been cited by a city or county code enforcement office, and they are worth a wholesaler’s time because every open case comes with deadlines, inspections and, often, fines that keep growing until the owner fixes the house or sells it.

Contract for Deed: A contract for deed is a home sale where the seller finances the price and keeps legal title until the buyer pays in full, while the buyer moves in, makes installment payments and holds equitable title in the meantime.

Cost Segregation for Rental Investors: Cost segregation is a tax study that splits the purchase price of a rental property into parts the IRS lets you depreciate faster, such as appliances, carpet, and site work, instead of writing off the whole building over 27.5 or 39 years.

Creative Financing: Seller financing, subject-to, novation and partnerships: what each creative financing strategy is, which seller it fits, and the rules to respect before you use one.

CRM for Real Estate Investors: A CRM for real estate investors holds every seller lead, conversation, and buyer, then tells you who to call next and which marketing channel produces contracts.

D

Deed in Lieu of Foreclosure: A deed in lieu of foreclosure is a deal in which a homeowner who has fallen behind on the mortgage signs the house over to the lender, and the lender in return cancels the loan, often waives some or all of the remaining balance, and skips the foreclosure.

Deed Restrictions: Deed restrictions are private rules, recorded in a deed, plat or subdivision declaration, that limit how a property can be used or built on, and they bind every later owner even when zoning would allow more.

Deficiency Judgment: A deficiency judgment is a court order making a borrower personally liable for the part of a mortgage debt that a foreclosure sale, or a lender-approved short sale, failed to pay off.

Delayed Financing: 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.

Depreciation Recapture on Rental Property: Depreciation recapture is the tax you pay when you sell a rental for more than its depreciated value: the IRS takes back part of the depreciation deductions you claimed while you owned it.

Divorce Real Estate Leads: Divorce real estate leads are homeowners whose divorce case means the house has to be sold or bought out.

Door Knocking: Door knocking in real estate means visiting owners in person to ask whether they would consider selling.

Driving for Dollars: How to drive for dollars the way working wholesalers do: what to look for, where to drive, how to log and skip-trace the list, and the outreach order that turns it into contracts.

DSCR Loan Explained: A DSCR loan is an investment property mortgage that qualifies the borrower on the rental income of the property instead of personal income.

Due on Sale Clause: A due on sale clause lets a lender demand the entire loan balance when the property is transferred without its consent.

E

Earnest Money in Wholesaling: How earnest money works on a wholesale deal, how to choose the amount, and the contract clauses and timeline that keep your deposit refundable.

Easement: An easement in real estate is a recorded or legally recognized right that lets someone other than the owner use part of a property for a specific purpose, such as a driveway across a neighbor’s lot, a power line along the back fence, or a drainage swale through a side yard.

Encroachment: An encroachment in real estate is a structure that crosses a property line or sits in an easement or setback where it does not belong.

Equitable Interest: Equitable interest in real estate is the right to obtain ownership of a property before you hold legal title.

Equity Multiple: The equity multiple in real estate is total cash distributions divided by total equity invested.

Equity Stripping: Equity stripping means reducing the equity a creditor could reach by placing debt against a property, and it also names illegal schemes that take distressed owners’ equity.

Escrow Holdback: An escrow holdback is money withheld at closing until repairs or another condition are completed after the sale.

Estoppel Letter: An estoppel letter is a signed statement from an HOA, lender, or tenant confirming what is owed or agreed as of a date.

Expired Listings: Expired listings are homes whose listing agreement ran out without a sale, leaving an owner who wanted to sell and has no agent under contract.

F

Fee Simple: Fee simple is the most complete form of property ownership in U.S.

FHA 90-Day Flip Rule: 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.

Financing Contingency: A financing contingency is a clause in a purchase contract that lets the buyer cancel and get the earnest money back if they cannot get the loan described in the contract by a set deadline.

Florida Foreclosure Timeline: The Florida foreclosure timeline usually runs from several months to well over a year, because every Florida mortgage foreclosure is a lawsuit.

Foreclosure Redemption Period: A foreclosure redemption period is the window when a former owner can still get the property back.

Foreclosure Surplus Funds: Foreclosure surplus funds are the money left over when a foreclosed property sells at auction for more than the debt, sale costs and liens paid from it.

G

Gap Funding: Gap funding is short-term private money that covers the difference between what a hard money lender will fund and the total cash a flip or wholesale-to-flip deal requires.

Georgia Foreclosure Timeline: Georgia is a nonjudicial foreclosure state, and with no delays a sale can happen roughly five months after a homeowner’s first missed payment.

Gross Rent Multiplier: The gross rent multiplier is price divided by gross rent.

H

Hard Money Loan: A hard money loan is a short-term, asset-based loan from a private lender, secured by investment real estate.

Heirs Property: Heirs property is land or a house inherited by several relatives, usually without a will or probate, so each heir owns an undivided share and nobody holds clear title.

HELOC on Investment Property: Yes, you can get a HELOC on investment property, but fewer lenders offer one and the terms are tighter than on a primary home.

Highest and Best Use: A property’s highest and best use is the reasonably probable use that produces the highest value, and it must pass four tests: legally permissible, physically possible, financially feasible, and maximally productive.

HOA Foreclosure: An HOA foreclosure is a sale of a home by its homeowners association to collect unpaid assessments.

Hoarder House Deals: A hoarder house is a home so full of possessions that rooms can no longer be used, and it is one of the most overlooked off-market deals.

House Hacking: 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.

I

Inspection Contingency: An inspection contingency gives the buyer a set number of days to inspect and cancel or renegotiate.

Installment Sale Real Estate: An installment sale in real estate lets a seller who finances part of the price report the gain as payments arrive instead of all at once.

Internal Rate of Return: The internal rate of return in real estate is the annual rate your cash earned over a whole investment, accounting for when each dollar went in and came out.

IRS Lien on a House: An IRS lien on a house is the federal government’s claim against an owner’s real estate for unpaid taxes.

Is Wholesaling Real Estate Legal: Wholesaling is legal in every state; the rules on how you do it are not the same everywhere.

J

Joint Venture Wholesaling: How joint venture wholesaling works, how to split fees fairly, what to put in a written JV agreement, and how to vet a partner and get paid at closing.

Judgment Lien: A judgment lien is a claim against a debtor’s real estate that a creditor gets after winning a lawsuit and recording the judgment.

L

Land Trust Real Estate: A land trust in real estate is a private agreement where a trustee holds legal title to a property while you, the beneficiary, keep control of it.

Lead-Based Paint Disclosure: A lead-based paint disclosure is required before a buyer or tenant is bound on any home built before 1978.

Lease Option Real Estate: A lease option is a rental agreement paired with the right, but not the obligation, to buy the property at a set price within a set period.

Life Estate: A life estate lets one person use a property for life, after which it passes to the remaindermen.

Liquidated Damages: Liquidated damages in real estate are a sum, usually the earnest money, that the seller keeps as full compensation if the buyer fails to close.

Lis Pendens: A lis pendens in real estate is a recorded notice that a lawsuit affecting a property’s title or ownership is pending.

List Stacking: List stacking means combining several motivated-seller lists and prioritizing the owners who show up on more than one.

Loan to Value Ratio: The loan to value ratio (LTV) is the loan amount divided by the property’s value, expressed as a percentage: a $240,000 loan on a $300,000 house is an 80% LTV.

M

Mechanics Lien: A mechanics lien is a claim against real estate filed by a contractor, subcontractor, laborer, or supplier who improved the property and was not paid, and it can be foreclosed to force a sale if the debt stays unpaid.

Memorandum of Contract: A memorandum of contract is a short recorded document that puts the public on notice that a property is under contract, without recording the full agreement.

Michigan Foreclosure Timeline: The Michigan foreclosure timeline usually runs about 11 months or more from the first missed payment to the end of the owner’s rights for a typical home: a 120-day federal delinquency period, four weeks of newspaper notice, a sheriff’s sale, then a six-month redemption period in which the owner keeps possession and can buy the house back.

Mobile Home Park Investing: Mobile home park investing means buying the land and infrastructure of a manufactured housing community and renting lots to residents who own their homes.

Morby Method: The Morby method pairs a DSCR or conventional investor loan for 75% to 80% of the price with a seller-carried second for the down payment.

Mortgage Note Investing: Mortgage note investing means buying the right to collect a homeowner’s loan payments, the promissory note and the mortgage or deed of trust that secures it, usually at a discount to the unpaid balance.

Mortgage Payoff Statement: A mortgage payoff statement is the servicer’s written figure for what it takes to pay a loan off on a specific date.

N

Net Operating Income: 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.

Notice of Default: A notice of default is the formal notice a lender or trustee issues, and in many states records, saying a borrower has broken the mortgage terms and foreclosure may follow.

Novation: What a novation agreement is, how investors use it to sell a seller’s house for more than a cash offer, and the licensing and disclosure questions to settle first.

O

Ohio Foreclosure Timeline: The Ohio foreclosure timeline typically runs from about six months to two years, because every Ohio mortgage foreclosure is a lawsuit in the county court of common pleas.

Option Contract: An option contract in real estate gives the buyer the right, but not the obligation, to purchase at a set price within a set period.

P

Partition Action: A partition action is a lawsuit in which one co-owner asks a court to divide the property or order it sold.

Pennsylvania Foreclosure Timeline: The Pennsylvania foreclosure timeline runs through the courts: 120 days of delinquency, an Act 91 notice, a complaint, judgment and a sheriff’s sale noticed at least 30 days ahead.

Pocket Listing: A pocket listing is a home for sale through an agent but kept off the MLS and shown only to selected buyers.

Portfolio Loan: A portfolio loan is a mortgage the lender keeps on its own books instead of selling it, so it can set its own rules.

Power of Attorney: A power of attorney in real estate lets one person, the agent, sign deeds, contracts, and closing documents for the property owner, the principal, so a sale can close even when the owner cannot sign.

Pre-Foreclosure and Tax-Delinquent Leads: How pre-foreclosure and tax delinquency work, where to find both lead types, the state rules to check first, and how to approach distressed owners fairly.

Private Money Lenders: Private money lenders are individuals who lend their own money to investors, secured by real estate.

Probate and Inherited Property Leads: How probate works, where to find probate and inherited property leads, when and how to reach out respectfully, and how to structure a deal that works for the family.

Proof of Funds Letter: A proof of funds letter shows a seller or agent that the buyer has the cash or committed financing to close.

Q

Quiet Title Action: A quiet title action is a lawsuit that asks a court to declare who owns a property and to wipe out competing claims, such as a missing heir’s share, an old mortgage that was never released, or the former owner’s interest after a tax sale.

R

Real Estate Acquisition Manager: A real estate acquisition manager is the person in a wholesaling or investing company whose job is to turn seller leads into signed purchase contracts at numbers that work.

Real Estate Attorney for Wholesaling: A real estate attorney for wholesaling reviews your contracts, tells you how your state’s rules apply to the way you do deals, and in some states handles the

Real Estate Comps: Real estate comps are recently sold properties similar enough to a subject property that their prices tell you what it is worth.

Real Estate Dispositions: Real estate dispositions is the work of selling a property or contract position to an end buyer.

Real Estate Due Diligence: 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.

Real Estate Exit Strategy: A real estate exit strategy is your plan for getting your money and profit back out of a property.

Real Estate Letter of Intent: A real estate letter of intent is a short document that lays out the main terms of a proposed purchase (price, deposit, due diligence, closing date) before anyone signs a full purchase and sale agreement.

Real Estate PPC for Investors: Real estate PPC for investors means buying Google or Bing ads that appear when homeowners search phrases like sell my house fast, paying only when someone clicks.

Real Estate Professional Status: Real estate professional status lets a qualifying taxpayer treat rental real estate losses as nonpassive.

Real Estate Syndication: 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.

Real Estate Transfer Tax: A real estate transfer tax is a one-time tax a state, county, or city charges when ownership of real property changes hands, usually figured as a percentage of the sale price and collected when the deed is recorded.

Real Estate Virtual Assistant: A real estate virtual assistant handles repeatable tasks like skip tracing, lead entry, cold calling and follow-up, so a wholesaler can spend more time with sellers.

Rental Arbitrage: Rental arbitrage is leasing a home on a standard long-term lease and then, with the landlord’s written permission, renting it to guests by the night.

Rental Property Depreciation: Rental property depreciation lets you deduct the cost of a residential rental building over 27.5 years, never the land.

REO Properties: REO properties are homes a lender, servicer or government agency took back through foreclosure and now sells on the open market, usually through a listing agent and almost always as-is.

Reverse Mortgage Foreclosure: A reverse mortgage foreclosure happens when a reverse mortgage becomes due and payable, usually because the last borrower died or moved out or the property taxes and insurance went unpaid, and nobody pays off, sells, or deeds back the home within HUD’s deadlines.

Right of First Refusal: A right of first refusal lets a tenant, co-owner, HOA, or resident group match the deal you signed with a seller.

S

Sale Leaseback: A sale leaseback lets an owner sell a property and lease it back, taking the cash while staying in place.

Section 8 Investing: Section 8 investing means buying rental property and renting it to tenants who use Housing Choice Vouchers, so a local public housing agency pays part of the rent directly to you each month.

Self-Directed IRA Real Estate: Self-directed IRA real estate investing means your IRA, not you, owns the property, and every dollar runs through the account.

Seller Financing: How seller financing works for buyers, sellers and investors: the note, the down payment, typical terms, the benefits and risks, and the rules that apply.

Seller Financing Contract: A seller financing contract is the set of documents that lets a buyer pay the seller over time instead of getting a bank loan.

Settlement Statement: A settlement statement in real estate is the itemized ledger of every dollar that moves at closing.

Short Sale Wholesaling: Short sale wholesaling means putting an underwater house under contract at a price the seller’s lender agrees to accept for less than the payoff, then passing the deal to a cash buyer for a spread.

Skip Tracing for Real Estate: What skip tracing is, where to get it done and what it costs, how to raise hit rates on absentee and LLC owners, and how to work the list without burning leads.

Specific Performance: Specific performance in real estate is a court order that forces a party who breached a purchase contract to actually complete the sale, instead of just paying money damages.

Squatters Rights: Squatters rights are the legal protections a person living in a property without permission may have, mainly the right to be removed through a court process instead of being thrown out.

Subject To Real Estate: How a subject-to (sub2) deal works, which sellers it helps, the due-on-sale risk, and how it compares with seller financing and a wholesale assignment.

Subordination Agreement: A subordination agreement is a signed, recorded document in which a lienholder agrees to let its lien sit behind another lien that would otherwise rank below it.

T

Tax Delinquent Property List: A tax delinquent property list is a list of properties whose owners are behind on property taxes.

Tenancy in Common for Investors: Tenancy in common lets two or more people own undivided, possibly unequal shares of the same property with no right of survivorship.

Texas Foreclosure Timeline: The Texas foreclosure timeline can run from a first missed payment to a courthouse auction in roughly six months.

The 1 Percent Rule: The 1 percent rule says monthly rent should equal at least 1% of the purchase price.

The BRRRR Method: The BRRRR method means buy, rehab, rent, refinance and repeat.

Title Commitment: A title commitment is a title insurer’s written offer to issue a title policy on a specific property, as long as the listed requirements are met and subject to the listed exceptions.

Title Insurance for Investors: Title insurance for investors works the same way it does for homebuyers: a one-time premium at closing buys coverage and legal defense against title problems that existed before you bought.

Transfer on Death Deed: A transfer on death deed lets an owner name a beneficiary who receives the property at death without probate.

Turnkey Rental Property: A turnkey rental property is a house that has already been bought, renovated, rented, and placed with a manager, then sold to an investor as a ready-to-run rental.

V

Vacant Property Insurance: Vacant property insurance covers a house nobody lives in, which describes most flips, BRRRR rehabs, and inherited homes.

Virtual Wholesaling: How virtual wholesaling works: pick a market from your desk, build buyers first, generate leads remotely, get eyes on the property through a local team, and close without being there.

W

Wholesale Real Estate Contracts Explained: The purchase agreement and the assignment of contract, clause by clause: and/or assigns, inspection period, earnest money, non-refundable buyer deposit, and the rest.

Wholesale Real Estate Taxes: For most wholesalers, assignment fees and double-close profits are ordinary business income, reported on Schedule C and subject to both income tax and 15.3% self-employment tax.

Wholesale Real Estate Website: A wholesale real estate website is really two sites: one for motivated sellers and one for cash buyers.

Wholesaling Commercial Real Estate: Wholesaling commercial real estate means contracting a commercial property below what an investor will pay and assigning the contract for a fee.

Wholesaling License: When a license is required to wholesale, which states tie wholesaling to licensing or registration, and the practical pros and cons of getting licensed.

Wholesaling Mobile Homes: Wholesaling mobile homes works like any wholesale deal on paper: you put a home under contract below what a buyer will pay, then assign the contract or resell it for a fee.

Wholesaling Real Estate: Wholesaling real estate means putting a property under contract with the owner and then selling your right to buy it to another investor for a fee, usually before

Wholesaling Software: Wholesaling software falls into five jobs: finding sellers (data), reaching them (dialer, texting, mail), tracking follow-up (CRM), analyzing deals (comps and calculators) and selling contracts (dispositions).

Wholesaling Vacant Land: What changes when you wholesale vacant land instead of houses: where land sellers come from, the due-diligence checklist, how to value lots, and who buys them.

Wholetailing Real Estate: Wholetailing real estate means buying a property outright, giving it a light clean-up or cosmetic refresh instead of a full renovation, and reselling it near retail value, usually by listing it on the MLS.

Wrap-Around Mortgage: A wrap-around mortgage is seller financing where the seller’s existing loan stays in place and the buyer’s new note “wraps” around it.

Z

Zombie Properties: Zombie properties are homes in the foreclosure process that the owner has already moved out of, leaving the house vacant while the bank has not yet taken title.

Foreclosure process by state

Foreclosure rules and timelines change from state to state. These guides cover each one: Alabama, Arizona, Colorado, Illinois, Indiana, Maryland, Minnesota, Missouri, New Jersey, New York, North Carolina, Oklahoma, South Carolina, Tennessee, Virginia, Washington, Wisconsin. For wholesaling laws, see our wholesaling by state guide.

Put the terms to work

Knowing the vocabulary is step one. To run real numbers, use the free deal calculators. To learn the full process, start with what wholesaling real estate is, grab the free starter kit or see how the mentorship program works.

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