Glossary

A comprehensive reference of real estate investing and financial terms used in reSniper.

A

ADR (Average Daily Rate)

The average rental income per occupied night for short-term rentals.

Formula: Total Revenue ÷ Nights Occupied

Example: $15,000 revenue over 75 nights = $200 ADR

ARV (After Repair Value)

The estimated market value of a property after all renovations are complete.

How to estimate:

Find 3+ comparable sold properties (same beds, baths, sqft, neighborhood)
Use sales from the last 90 days
Adjust for differences in condition, features, lot size

Why it matters: ARV determines your refinance amount (BRRRR) or sale price (flip).

B

Break-Even Occupancy

The minimum occupancy percentage needed to cover all expenses in a short-term rental.

Formula: Fixed Costs ÷ (Nightly Rate - Variable Costs)

Healthy target: Under 50% break-even gives you safety margin.

BRRRR

An investment strategy: Buy, Rehab, Rent, Refinance, Repeat.

The goal is to recover most or all of your invested capital through refinancing, then use that capital to buy the next property.

Learn more →

C

Cap Rate (Capitalization Rate)

A measure of a property's return as if purchased with all cash (no financing).

Formula: NOI ÷ Purchase Price × 100

Example: $12,000 NOI ÷ $200,000 = 6% Cap Rate

Use for: Comparing properties regardless of financing terms.

CapEx (Capital Expenditures)

Major repairs and replacements that add value or extend property life.

Examples: Roof, HVAC, water heater, appliances, flooring

Reserve guideline: 5-10% of monthly rent

Cash Flow

The money remaining after all income and expenses.

Formula: Rental Income - All Expenses (mortgage, taxes, insurance, reserves, management)

Positive cash flow = profit; Negative cash flow = loss

Cash-on-Cash Return (CoC)

Your annual return on the actual cash you invested.

Formula: Annual Cash Flow ÷ Total Cash Invested × 100

Example: $3,600 annual flow ÷ $40,000 invested = 9% CoC

Target: 8-12%+ depending on market and risk tolerance

Closing Costs

Fees paid when purchasing or refinancing a property.

Buying costs include: Title insurance, escrow fees, recording fees, loan origination, inspection

Typically: 2-4% of purchase price

Contingency

A buffer added to rehab budgets for unexpected costs.

Recommendation: Add 10-20% contingency to your rehab estimate

Example: $40,000 rehab estimate + 10% = $44,000 budget

D

DSCR (Debt Service Coverage Ratio)

A measure of whether rental income covers the mortgage payment.

Formula: NOI ÷ Annual Debt Service (P&I)

Example: $14,400 NOI ÷ $12,000 debt = 1.2 DSCR

Lender requirements: Usually 1.20-1.25 minimum

Meaning:

DSCR > 1.0 = Income covers debt
DSCR < 1.0 = Negative cash flow

Down Payment

The portion of the purchase price you pay in cash (not financed).

Conventional loans: 20-25% for investment properties DSCR loans: 20-25% typical Hard money: 10-30% depending on lender

E

Equity

The difference between property value and what you owe.

Formula: Current Value - Mortgage Balance

Equity builds through:

Paying down the mortgage
Property appreciation
Forced appreciation (renovations)

G

GRM (Gross Rent Multiplier)

A quick metric to compare rental properties.

Formula: Purchase Price ÷ Annual Gross Rent

Example: $180,000 ÷ $18,000 = 10 GRM

Lower is better: Under 10 = good for cash flow markets

H

Hard Money Loan

Short-term financing from private lenders, typically for flips or BRRRR.

Characteristics:

Higher interest rates (10-14%)
Upfront points (2-4 points)
Short terms (6-24 months)
Fast approval
Asset-based (less credit-dependent)

HELOC (Home Equity Line of Credit)

A line of credit secured by equity in another property (usually your primary residence).

Use cases:

Down payment for investments
Rehab funding
Bridge financing

Holding Costs

Expenses incurred while owning a property during rehab or before sale/rent.

Includes: Property taxes, insurance, utilities, loan interest, lawn care

Critical for flips: Every month of holding eats into profit.

L

LTV (Loan-to-Value)

The ratio of loan amount to property value.

Formula: Loan Amount ÷ Property Value × 100

Example: $150,000 loan ÷ $200,000 value = 75% LTV

Refinance limits: Most lenders cap at 70-80% LTV

M

MAO (Maximum Allowable Offer)

The highest price you should pay for a property to meet your target returns.

BRRRR Formula: (ARV × LTV) - Rehab - Soft Costs

Flip Formula (70% Rule): ARV × 70% - Rehab Cost

Purpose: Sets your negotiation ceiling.

Money Left in Deal

Capital that remains invested after refinancing (in BRRRR strategy).

Formula: Total Investment - Refinance Proceeds

Goal: $0 or negative (cash back) for infinite returns

N

NOI (Net Operating Income)

Property income after operating expenses, but before debt service.

Formula: Gross Income - Operating Expenses

Excludes: Mortgage payment, depreciation, capital expenditures

Use for: Cap Rate calculation, DSCR calculation

O

Occupancy Rate

Percentage of time a property is rented.

Long-term rental: Typically 92-95% (accounting for turnover) Short-term rental: Varies widely (50-80% typical)

Formula: Occupied Days ÷ Available Days × 100

OpEx (Operating Expenses)

Day-to-day costs of running a rental property.

Includes: Property management, repairs, maintenance, landscaping, pest control

Reserve guideline: 5-10% of rent

P

PITI

The four components of a mortgage payment.

Principal + Interest + Taxes + Insurance

This is your total monthly housing payment (before reserves and management).

Points

Upfront fees charged by lenders, expressed as a percentage of the loan.

1 point = 1% of loan amount

Example: 2 points on $100,000 loan = $2,000 upfront fee

Common with hard money and bridge loans.

Property Management Fee

Fee paid to a property manager for handling tenants and maintenance.

Typical rate: 8-10% of monthly rent

Includes: Tenant placement, rent collection, maintenance coordination

R

Rehab

Renovation or repair work done to a property.

Cosmetic rehab: Paint, flooring, fixtures ($10-25/sqft) Full rehab: Kitchen, bath, systems ($30-60/sqft) Major rehab: Structural, additions ($60-100+/sqft)

RevPAR (Revenue Per Available Room)

Short-term rental metric measuring revenue efficiency.

Formula: Total Revenue ÷ Available Nights

Better than ADR because it accounts for vacancy.

Example: $12,000 ÷ 90 days = $133 RevPAR

ROI (Return on Investment)

Total profit as a percentage of money invested.

Formula: Net Profit ÷ Total Investment × 100

For flips: Measures project profitability Annualized ROI: Adjusts for time (useful for comparing different holding periods)

S

Soft Costs

Non-construction costs in a rehab or purchase.

Includes: Closing costs, holding costs, loan points, permits, inspections

Typically: 8-15% of ARV for BRRRR deals

T

Turnkey Property

A fully renovated, rent-ready property.

Characteristics:

Move-in condition
Often tenant-occupied
Higher purchase price
Lower risk/lower returns

Learn more →

V

Vacancy Rate

Expected percentage of time a property sits empty.

Long-term rental: 5-8% typical Short-term rental: Calculate based on seasonal occupancy

Always factor vacancy into cash flow projections.

1

1% Rule

Quick screening rule for rental properties.

Rule: Monthly rent should be ≥ 1% of purchase price

Example: $200,000 property should rent for $2,000+/month

Limitation: Doesn't account for taxes, insurance, or local factors. Use as a first filter only.

70% Rule

Quick screening rule for house flips.

Rule: Purchase price ≤ 70% of ARV minus rehab costs

Formula: MAO = ARV × 70% - Rehab

Example: $200,000 ARV, $40,000 rehab → MAO = $100,000

Why 70%: Leaves room for holding costs, transaction costs, and profit.