A

Appraisal

A licensed appraiser’s professional opinion of a property’s current market value, typically required by lenders before approving a mortgage or hard money loan.

ARV (After Repair Value)

The estimated market value of a property once renovations are complete. ARV is the anchor number for most flip underwriting — your offer price, rehab budget, and profit projection are all built around it. See our Fix and Flip Calculator to estimate yours.

Assignment (Contract Assignment)

A wholesaling technique where an investor assigns their purchase contract to another buyer for a fee, without ever taking ownership of the property themselves.

B

BRRRR (Buy, Rehab, Rent, Refinance, Repeat)

An investment strategy where you buy a distressed property, renovate it, rent it out, then refinance to pull your original cash back out — allowing you to repeat the process with the same capital.

C

Cap Rate (Capitalization Rate)

A rental property valuation metric: annual net operating income divided by property value, expressed as a percentage. Used mainly for buy-and-hold and rental analysis rather than flips.

Carrying Costs

See Holding Costs.

Cash-on-Cash Return

Annual pre-tax cash flow divided by the total cash invested, expressed as a percentage. A common way to measure return on a rental property.

Closing Costs

Fees paid at the completion of a real estate transaction — title insurance, escrow fees, recording fees, loan origination fees, and more — paid by the buyer, seller, or both depending on local custom and negotiation.

Comps (Comparable Sales)

Recently sold properties similar in size, condition, and location to the one you’re evaluating, used to estimate current market value or ARV.

Contingency

A condition in a purchase contract that must be satisfied for the sale to proceed — common contingencies include financing, inspection, and appraisal contingencies.

D

Distressed Property

A property in poor physical condition or under financial distress (foreclosure, tax delinquency, etc.), often sold below market value — a common target for flippers.

Double Close

A wholesaling transaction structure where the wholesaler buys the property and immediately resells it to the end buyer in a second, back-to-back closing, rather than assigning the contract.

Draw Schedule (Construction Holdback)

The staged release of rehab funds by a hard money lender — typically 3-6 milestone payments — issued after each phase of work is inspected and approved, rather than funding the full rehab budget upfront. See how FlipMargin tracks contractor draws against your rehab budget.

DSCR (Debt Service Coverage Ratio)

A lending metric used mainly for rental property loans: a property’s net operating income divided by its annual debt payments. Lenders use DSCR loans to qualify borrowers based on the property’s income rather than personal income.

E

Earnest Money

A deposit made by a buyer to demonstrate serious intent to purchase, held in escrow and applied toward the purchase price at closing (or forfeited if the buyer backs out outside of contract contingencies).

Escrow

A neutral third party that holds funds and documents during a transaction until all conditions of the sale are met.

F

Fix and Flip

An investment strategy of purchasing a property, renovating it, and reselling it for a profit — typically within a matter of months.

G

General Contractor (GC)

The primary contractor responsible for overseeing a renovation project, coordinating subcontractors, and managing the overall scope of work.

Gross Rent Multiplier (GRM)

A rental property valuation shortcut: property price divided by annual gross rental income. Lower GRM generally indicates a better cash-flowing deal.

H

Hard Money Loan

A short-term, asset-backed loan from a private lender, commonly used to finance fix-and-flip purchases and rehabs. Hard money loans have higher interest rates than conventional mortgages but fund faster and are approved based on the deal, not just the borrower’s credit.

HOA (Homeowners Association)

An organization that manages a community’s shared spaces and enforces rules, funded by mandatory fees from property owners — an important cost to factor into holding costs.

Holding Costs (Carrying Costs)

The ongoing monthly expenses of owning a property during a flip — loan payments, property taxes, insurance, and utilities — that accumulate the longer a project takes. Use our free flip tracker spreadsheet to start estimating yours.

I

Inspection Contingency

A contract clause giving the buyer the right to have the property professionally inspected and to renegotiate or walk away from the deal if significant issues are found.

L

Listing Agent

The real estate agent representing the seller in a transaction, responsible for marketing the property (typically via the MLS) and negotiating on the seller’s behalf.

M

MAO (Maximum Allowable Offer)

The highest price an investor should pay for a property to still hit their target profit margin, typically calculated using the 70% rule: MAO = (ARV × 0.70) − estimated repair costs. Run your own numbers with our Fix and Flip Calculator.

MLS (Multiple Listing Service)

A database used by real estate agents to list and search properties for sale — the primary source of comps for most ARV estimates.

Motivated Seller

A seller under pressure (financial, personal, or timeline-driven) to sell quickly, often willing to accept a lower price in exchange for a fast, hassle-free transaction.

O

Off-Market Deal

A property being sold without being publicly listed on the MLS — often sourced through direct mail, networking, or wholesalers, and prized by investors for reduced competition.

P

Permit

Official government authorization required before performing certain renovation work (electrical, plumbing, structural, additions), obtained from the local building department.

Pre-Foreclosure

The period after a homeowner has defaulted on their mortgage but before the lender completes the foreclosure process — a window where investors sometimes negotiate directly with distressed sellers.

Private Money Lender

An individual (rather than an institution) who lends money for real estate deals, often at negotiated terms — commonly used alongside or instead of hard money loans.

Proof of Funds

A document (bank statement, lender letter) showing a buyer has sufficient funds to close a deal, often required by sellers or agents before accepting an offer, especially on cash deals.

Punch List

A list of small, final tasks or defects to fix before a renovation project is considered complete.

R

Rehab (Rehabilitation)

The renovation work performed on a property to bring it up to market-ready condition — the “R” in both “fix and flip” and “BRRRR.” See how FlipMargin’s Features break your rehab budget down by trade.

REO (Real Estate Owned)

A property that has gone through foreclosure and reverted to lender ownership after failing to sell at auction — often sold at a discount by the bank.

S

Scope of Work

A detailed breakdown of every renovation task planned for a project, typically organized by trade (demo, framing, electrical, plumbing, etc.) and used to build a rehab budget and get contractor quotes. See our How It Works guide for a walkthrough of turning a scope of work into a live budget.

Short Sale

A sale where the lender agrees to accept less than the outstanding mortgage balance because the homeowner is in financial distress — requires lender approval and typically takes longer to close.

Subcontractor (Sub)

A specialized tradesperson (electrician, plumber, roofer, etc.) hired by a general contractor to perform a specific portion of a renovation.

Subject-To

A creative financing strategy where a buyer takes over a property’s existing mortgage payments without formally assuming the loan, leaving the original loan in the seller’s name.

Sweat Equity

Value added to a property through an investor’s own labor rather than paid contractors, reducing the cash rehab budget at the cost of the investor’s time.

T

Tax Lien

A legal claim placed on a property by a government agency for unpaid property taxes, which must be resolved before the property can be sold with clear title.

Title Insurance

Insurance protecting a buyer or lender against financial loss from defects in a property’s title (liens, ownership disputes, etc.) discovered after purchase.

Turnkey Property

A property that’s fully renovated and ready to rent or occupy immediately, requiring no further work from the buyer — the opposite of a distressed fixer-upper.

70% Rule

A quick underwriting formula for flips: Maximum offer = (ARV × 0.70) − estimated repair costs. It’s a rule of thumb, not a guarantee — it’s meant to leave enough margin for holding costs, selling costs, and profit.

U

Under Contract

The status of a property once a purchase agreement has been signed by both parties but the sale hasn’t yet closed.

W

Walk-Through

A final in-person inspection of a property, typically conducted shortly before closing to confirm its condition, or after rehab work to verify completion against the punch list.

Wholesaling

A strategy where an investor puts a property under contract at a discounted price, then sells (assigns or double-closes) that contract to another buyer for a fee, without ever renovating or holding the property themselves.