- LTV (loan to value)
- How big is the loan compared to what the property is worth today?
- LTC (loan to cost)
- How big is the loan compared to everything you spend to buy and fix the property?
- LTARV (loan to after repair value)
- How big is the loan compared to what the property will be worth after the repairs are done?
- After repair value
- What the property should be worth once all the fixing is finished.
- Cap rate
- How much money the property earns each year compared to its price. Higher means more income for the price.
- DSCR
- Can the property's income cover the loan payments? Above 1 means yes, with room to spare.
- Amortizing
- Each payment pays some interest and also pays down the loan, so you owe less over time.
- Interest only
- Each payment pays only the interest. The loan amount stays the same until the end.
- Net operating income
- The money the property earns in a year after paying its bills, before the loan payment.
- Sponsor (borrower)
- The person or company buying the property and asking for the loan. That is you.
- Rent roll
- A list of every unit, who rents it, and how much rent they pay.
- Sources and uses
- Where the money comes from, and what the money is spent on.
- Stress test
- We pretend things get worse, like higher rates or less rent, to see if the deal still works.
- Basis points
- A small way to count interest rate changes. 100 basis points equals 1 percent.
- Bridge loan
- A short loan that gets you from buying the property to a longer, cheaper loan later.
- Value add
- Buying a property and fixing it up so it earns more and is worth more.
- Cash out refinance
- Getting a new, bigger loan on a property you own and keeping the extra money.
- Equity
- The part of the property you truly own: what it is worth minus what you still owe.