Glossary

Capital Expenditure

Capital expenditure, or “CapEx,” refers to money used by businesses to buy, upgrade, and maintain long-term physical assets. Learn More

Calculation: A percentage of Rental Income
Display: Decimals are trimmed.

Cap Rate

The capitalization rate is the rate of return an investor can expect from an investment in real estate, assuming they pay all cash. Learn More

Calculation: Net Operating Income (NOI) / Purchase Price
Display: One decimal and is rounded by the second decimal.

Cashflow

Cash flow is the amount of profit you bring in each month after collecting all income, paying all operating expenses, and setting aside cash reserves for future repairs. Learn More

Calculation: Rental Income - Mortgage - Taxes - Insurance - Utilities - Maintenance - Miscellaneous - Capital Expenditure - Property Management - Vacancy
Display: Rounded to nearest dollar.

Cash On Cash ROI

A cash-on-cash return is a rate of return often used in real estate transactions that calculates the cash income earned on the cash invested in a property. Learn More

Calculation: Annual Cashflow / Cash Invested (Down Payment + Closing Costs + Rehab)
Display: One decimal and is rounded by the second decimal.

Closing Costs

Closing costs are payments that occur when finalizing a real estate transaction, such as the sale or purchase of a house. Learn More

Debt Service

Debt service is the cash that is required to cover the repayment of interest and principal on a debt for a particular period. Learn More

Calculation: Mortgage * 12 months
Display: Rounded to nearest dollar.

Debt Service Coverage Ratio (DSCR)

The debt-service coverage ratio (DSCR) is a measurement of a property’s available cash flow to pay current debt obligations. The DSCR shows investors whether a property has enough income to pay its debts. Learn More

Calculation: Net Operating Income (NOI) / Annual Debt Service
Display: Two decimals. Not rounded.

Down Payment

A down payment is a sum of money that a buyer pays in the early stages of purchasing a property. The down payment represents a portion of the total purchase price, and the buyer will often take out a loan to finance the remainder. Learn More

Display: Rounded to nearest dollar.

Insurance

Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. Learn More

Interest Only (IO)

An interest only loan is a loan in which the borrower pays only the interest for some or all of the term, with the principal balance unchanged during the interest only period. In the app, this is shown as the monthly mortgage amount if IO is selected. Learn More

Interest Rate

The interest rate is the amount a lender charges a borrower and is a percentage of the principal—the amount loaned. Learn More

Maintenance

Maintenance is for keeping the property in good, working condition, and fixing any repairs for the property.

Miscellaneous

Miscellaneous can be used for any other expenses not covered in the other sections.

Mortgage

The term “mortgage” refers to a loan used to purchase or maintain a home, land, or other types of real estate. The borrower agrees to pay the lender over time, typically in a series of regular payments that are divided into principal and interest. Learn More

Display: Rounded to nearest dollar.

Net Operating Income (NOI)

Net operating income (NOI) is a calculation used to analyze the profitability of income-generating real estate investments. NOI equals all revenue from the property, minus all reasonably necessary operating expenses. Learn More

Calculation: (Rental Income - Taxes - Insurance - Utilities - Maintenance - Miscellaneous - Property Management - Vacancy) * 12 months
Excluded: Mortgage, Capital Expenditure

Price

The purchase price of the property.

Principal

A loan’s actual balance, excluding the interest owed for borrowing, is called the principal. In the app, this is shown as the estimated monthly Principal at the beginning of the loan. Learn More

Principal & Interest (P&I)

The principal is the amount borrowed and required to pay back, and interest is what the lender charges for lending you the money. In the app, this is shown as the monthly mortgage amount if P&I is selected. Learn More

Profit Price

A BallparkDeal term used to describe the maximum allowable offer (MAO) for a property based on a desired return on investment.

Property Management

Property managers are individuals or companies that are hired to manage a rental property. Learn More

Calculation: A percentage of Rental Income
Display: Decimals are trimmed.

Rehab

Rehab is the cost to make the property rent-ready.

Rental Income

Rental income is any payment you receive for the use or occupation of property. Learn More

Taxes

Property tax is a tax paid on property owned by an individual or other legal entity, such as a corporation. Learn More

Total ROI

Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. Learn More

Calculation: (Annual Cashflow + Annual Principal Payments) / Cash Invested (Down Payment + Closing Costs + Rehab)
Display: One decimal and is rounded by the second decimal.

Utilities

Utilities are the essential services needed for the property to be functional that are the property owner’s expenses. They can include electricity, natural gas, oil, water, sewage, trash, and sometimes internet and cable.

Vacancy

The vacancy rate is the percentage of all available units in a rental property that are vacant or unoccupied at a particular time. Learn More

Calculation: A percentage of Rental Income
Display: Decimals are trimmed.