Beginner Investors 38 Most Important Real Estate Abbreviations and Acronyms by Mays Kuhail May 17, 2019May 17, 2019 by Mays Kuhail May 17, 2019May 17, 2019 Do I really need to know all of these real estate abbreviations and acronyms? One word: yes. There is a wide range of real estate abbreviations and real estate acronyms in the industry. Whether you’re a beginner or an expert in real estate, it’s important for any investor to get acquainted with the vocabulary and jargon used by professionals in this business. The following is a compilation of the most used real estate acronyms and abbreviations (that you do need to know). Some are more obvious than others. You may recognize a few right off the bat, while others may be new to you. Part I: General Real Estate Abbreviations and Acronyms This part will feature more general real estate acronyms and abbreviations that get thrown around in real estate, or real estate jargon if you will. Many are basic terms you need to know, especially if you’re buying an investment property. Real Estate LLC: Limited Liability Company A real estate LLC is a company that is its own legal entity and is essentially a real estate business. Investors choose to form a real estate LLC for tax benefits, decreased liability, and more freedom when investing. Related: The Advantages and Disadvantages of a Real Estate Limited Liability Company LLP: Limited Liability Partnership This is where partners hold more liability, and where they carry the debts of the entity. This is another way to structure a real estate business. ROI: Return on Investment ROI is a ratio which measures the net profit vs. the cost of investment. The higher the ROI, the more profit you’re making. NOI: Net Operating Income Net operating income (NOI) is a formula which measures the profit a rental property generates after covering its expenses. The NOI formula is as follows: NOI = Gross Income – Operating Expenses In other words, the NOI allows real estate investors to better evaluate a property’s profitability in relation to income and expenses and costs. And in addition to being a good real estate metric, it will also help you assess how well your investment property is able to cover its debt or mortgage payments. Related: A Guide to the Net Operating Income Formula for Rental Properties CoC: Cash on Cash Return Another important one on our real estate abbreviations list, CoC return measures the relationship between cash invested and the cash flow, or net operating income of a property. CoC return measures the annual return on investment. Cap Rate: Capitalization Rate Cap rate, short for capitalization rate, is a measure of the profitability of a real estate investment. It’s an indicator of how much profit the property is generating compared to its value. Usually, the higher the cap rate figure, the higher the prospective profitability. The opposite is also true, meaning that the lower the cap rate, the lower the profitability. And, in theory, the higher the cap rate, the higher the risk of the investment. So the cap rate can also be used to measure the risk of an investment to some extent. Cap rate is calculated using the following formula: To find cap rate, as well as other real estate indicators and metrics, use Mashvisor. Our investment property calculator allows you to look for and analyze values for cap rate, CoC return, and expected rental income. Sign Up for Mashvisor FSBO: For Sale by Owner FRBO: For Rent by Owner ARV: After Repair Value This one is pretty self-explanatory, but if you’re not a house flipper, you may not have come across it. This is the value of the property after it has been repaired. CMA: Comparative Market Analysis Comparative market analysis is the process of determining an investment property’s value by comparing it to other properties similar in size, amenities, etc. Comparative market analysis takes both the property itself into consideration, as well as the market in general. To measure this, real estate investors use different real estate comps and indicators. Related: The Best Comparative Market Analysis Tools for Beginner Investors CRE: Commercial Real Estate Commercial real estate involves investing in properties used for commercial purposes, such as warehouses, offices, hotels, malls, medical centers, multi-family properties (5 units or more), etc. FMV: Fair Market Value The value both buyers and sellers agree upon. GRM: Gross Rent Multiplier HOA: Homeowners Association HUD: Housing and Urban Development IRR: Internal Rate of Return L/O: Lease Option A lease option is a type of agreement in which a tenant is given the opportunity to buy a property after a period of renting it. RTO: Rent to Own Similar to a lease option, the RTO allows the tenant to buy the property during the rental period. The difference between the L/O and RTO is that RTO gives the tenant more time to secure payment for the property. MLS: Multiple Listing Service SFH: Single-Family Home MFH: Multi-Family Home LOC: Line of Credit LOC is a payment option for non-owner occupied properties (see below). It provides real estate investors with funds based on the equity of an investment property. REIT: Real Estate Investment Trust This is a company which finances, owns, manages, and operates income-producing investment properties. Individual real estate investors can invest their money in a REIT and typically receive dividends based on their cash investment. Part II: Real Estate Listing Abbreviations and Acronyms Investors also use real estate abbreviations and acronyms when listing properties for sale. These can help investors identify whether or not a listed property matches their specific criteria when searching for an investment property. There are numerous real estate acronyms/abbreviations out there, but these are among the most common: APT: Apartment 1C: The C refers to a car garage. 1C means that the property has one car garage. 3B/2B: A property with three bedrooms and two bathrooms. Similarly, a 4B/3B would have four bedrooms and three bathrooms. BA: Bath BR: Bedroom MBA: No, not a master’s in business administration; MBA stands for master bedroom with bathroom. LV: Living Room ELV: Elevator. This is mostly seen in listings for apartment rentals. Bsmt: Basement SEC SYS: Security System HW: Hot Water (always important!) Actv: Active Listing This means the property is up for sale and not under any contract. CLSD: Closed, or Sold Listing. The property has become under contract. OO: Owner Occupied Owner occupied means that the owner of the property resides in it. NOO: Non-Owner occupied This means that the owner of the property does not reside in it when it’s rented or sold, although the term is most commonly used for apartment buildings. Is That All? Not quite. There are obviously several other real estate acronyms and real estate abbreviations out there. This is a small guide for real estate investing for beginners. Once you’re acquainted with the above, there’s always room to learn more as you get more and more involved in the industry. Start Your Investment Property Search! START FREE TRIAL ListingsReturn on Investment 0 FacebookTwitterGoogle +PinterestLinkedin Mays Kuhail Mays is a Content Writer and freelance creative writer with multiple years of experience in US real estate market analysis. Mays has background in communication, content development, and digital marketing. She holds a BA in Business Administration and Marketing. Previous Post How to Refinance Investment Property to Buy Another Next Post How to Find the Most Profitable Vacation Home Investment Related Posts A Formula for Investing in Real Estate Rentals (That Actually Works) How to Start a Rental Property Business – 5 Simple Steps What are the pros and cons of a real estate open house? 7 Signs of a Bad Real Estate Agent How to Find Average Rent in Area of Your Choice How is real estate investing fun? Are You Ready for Buying an Investment Property? 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