REI glossary

ARV (After Repair Value)

The estimated market value of a property afterall renovations are complete. It's the anchor for almost every investor calculation - get it wrong and the whole deal math is wrong. The reliable way to estimate ARV is from recent comparable sales; that's what a tool like DealCheck or PropStream pulls for you.

MAO (Maximum Allowable Offer)

The most you can pay for a property and still hit your target profit. For wholesalers the standard formula is MAO = (ARV × 70%) - repairs - your fee. Run yours on our free MAO calculator.

70% Rule

A guardrail that says don't pay more than 70% of ARV minus repairs. It protects your margin; investors flex the percentage (65-75%) based on how hot or risky the market is.

Skip Tracing

Looking up a property owner's phone numbers and emails so you can contact them. The cost model varies hugely: free and unlimited on DealMachine, billed per match on REsimpli. See how the costs compare on our software cost calculator.

Hit Rate (skip tracing)

The percentage of records a provider returns anycontact data for. It is not the same as accuracy - a “95% hit rate” can still mean lots of wrong numbers. We break down why in how to read a skip-trace hit rate honestly.

Right-Party Contact (RPC)

The share of skip-traced records where you actually reach the correct owner. It's the only skip-trace metric that maps to real conversations and deals - and it's almost never quoted by vendors.

Driving for Dollars (D4D)

Driving neighborhoods to spot distressed or vacant properties as off-market leads, then looking up the owner. Apps automate the route, owner lookup, and mail - the category leader in our testing is DealMachine.

Wholesaling

Getting a property under contract and assigning that contract to a cash buyer for a fee, without ever owning the property. The wholesaler profits on the spread between the contract price and what the buyer pays.

Assignment Fee

The wholesaler's profit - the amount a cash buyer pays to take over (be assigned) the purchase contract. It's the 'fee' you subtract in the MAO formula.

BRRRR

Buy, Rehab, Rent, Refinance, Repeat - a rental strategy where you buy distressed, renovate, rent it out, then refinance to pull your capital back out and do it again.

Cash-on-Cash Return

Annual pre-tax cash flow divided by the actual cash you put in. It measures the return on the money you personally invested, not the property's full value.

Cap Rate (Capitalization Rate)

Net operating income divided by the property's value, as a percentage. A quick way to compare income properties independent of financing.

Comps (Comparable Sales)

Recently sold properties similar to your subject, used to estimate value and ARV. Quality comps drive accurate numbers - the deepest comp tool we tested is PropStream.

Absentee Owner

An owner whose mailing address differs from the property address - i.e. they don't live there. Often a strong motivated-seller signal (tired landlords, inherited or out-of-state owners).

Pre-Foreclosure

A property whose owner has missed mortgage payments and received a default notice, but which hasn't yet been sold at auction. A classic distressed-seller lead category.

Lis Pendens

Latin for 'suit pending' - a public notice that a lawsuit (often a foreclosure) has been filed against a property. It's one of the records investors filter for to find pre-foreclosures.

List Stacking

Combining multiple lead lists (e.g. absentee owners + high equity + tax delinquent) and keeping the properties that appear on several, on the theory that more distress signals mean a more motivated seller.

Cash Buyer

An investor who buys properties with cash (no financing). Wholesalers assign contracts to cash buyers because they can close fast; building a cash-buyer list is core to dispositions.

High Equity

A property where the owner owes little relative to its value, leaving room to sell at a discount and still walk away with money. A common filter for finding owners able to take a cash offer.

Missing a term you'd like defined? Tell us on the contact page. To see these concepts in action, read a hands-on review or run the MAO calculator.