GuideReference
Glossary
The investing and construction terms the app uses, in plain words.
The deal
| Term | Meaning |
|---|---|
| ARV | After-repair value: what the house should sell for once the work is done. $289,000 for the example. |
| Comp | A comparable sale nearby that supports your ARV |
| MAO, max offer | The most you can pay and still make your target profit |
| 70% rule | A rule of thumb: pay no more than 70% of ARV, less the rehab |
| Target profit | What you want to make. You type it. |
| Projected profit | What the app works out you'll make at today's numbers |
| Wholesale | Selling your contract to another investor for a fee, without doing the rehab |
| BRRRR | Buy, rehab, rent, refinance, repeat |
| Exit | How you get out of the deal: flip, wholesale, or rent |
The money
| Term | Meaning |
|---|---|
| Budget | Your budget lines plus contingency |
| Contingency | A percent held in reserve on top of the budget lines |
| Spent | Posted expenses, not counting holding costs |
| Remaining | Budget minus Spent |
| Hold, holding costs | What it costs to own the house until it sells: taxes, insurance, utilities, and loan costs |
| Selling costs | Agent fees, closing costs, and concessions |
| Posted | An expense that counts. The opposite is void. |
| Void | An expense struck from the totals but kept on the record |
| Cash out | Rehab spent plus hold |
| Other income | Money in besides the sale: rent, a seller credit, a forfeited deposit |
The loan
| Term | Meaning |
|---|---|
| Hard money | A short-term loan from a private lender, priced in points and interest |
| Points | An upfront fee. One point is 1% of the loan. |
| Holdback | The part of the loan kept back for the rehab and released in draws |
| Draw | A request for part of the holdback, after work is done |
| Dutch interest | Interest charged on the full loan from day one, drawn or not |
| Funded balance | What the lender has actually sent so far |
The job
| Term | Meaning |
|---|---|
| Scope of work, SOW | The list of work a contractor is pricing or has agreed to do |
| Bid | A contractor's price for a line of work |
| Change order | A priced change to the scope after the job has started |
| Rough-in | Plumbing, electrical, and HVAC run inside the walls before they're closed up |
| Punch list | The small things left to fix at the end of the job |
| Critical path | The chain of tasks that sets the finish date |
| Trade | A kind of work, such as Plumbing or Drywall |
| W-9 | The form a contractor gives you with their tax details |
| 1099-NEC | The form you send a contractor you paid over the threshold in a year |
Rentals
| Term | Meaning |
|---|---|
| Rent roll | Month by month, what was due and what was paid |
| Grace days | Days after the due date before rent counts as late |
| Cash flow | Rent minus expenses and the loan payment |
| Cash-on-cash | A year's cash flow divided by the cash you left in the house |
| Cap rate | A year's income before the loan, divided by the house's value |
| Debt coverage, DSCR | Income before the loan, divided by the loan payment |
| Schedule E | The tax form for rental income and expenses |
| Cost basis | What the house cost you, used to work out depreciation |
The app
- House and property mean the same thing.
- Stage is where a house is in the business, from Lead to Sold. Status is how the job is going: On track, At risk, or Delayed.
- Owner, Admin, and Team Member are the three roles. A contractor has a login but isn't on the team.
- Workspace is your company's account: its houses, people, and contacts.