As many of you know, when you’re working in real estate (buying, selling, investing, lending, etc.) there are tons of acronyms used. Are you new to the real estate world and are confused by all the terminology these veterans are using? Here is your cheat sheet to the most commonly used acronyms that we use day to day. We suggest familiarizing yourself with these and even keep it handy when having conversations so you can fit right in. You’ll be an expert in no time!
TLC – Tender Loving Care
You will hear this when you are buying a property that needs work.
ARV – After Repair Value
Value of the property once it has been updated/remodeled
LTV – Loan to Value
The ratio of a loan to the value of a property.
CMA – Comparative Market Analysis
A CMA will pull comparables and tell you what your property is worth.
MLS – Multiple Listing Services
All of the properties listed in your area will be on the MLS. Your real estate agent can get you access to this.
FSBO – For Sale By Owner
When a house is listed for sale by the owner rather than for sale by a real estate agent.
REO – Real Estate Owned
Properties you currently own. Lenders like to see what your real estate experience is by looking at your Schedule of REO.
SFH/R – Single Family Home/Residence
This property is a home/1 unit that is typically for one family
ROI – Return on Investment
The ROI is the amount of money you will be making based on what you spend
NOI – Net Operating Income
Equals all revenue from the property then subtracting the expenses. The total will be the NOI.
CAP Rate – Capitalization Rate
The rate of return that is expected from your Real Estate investment
HOA – HomeOwners Association
Private organization in a subdivision or neighborhood that creates and enforces rules and regulations in condominium buildings, neighborhoods or subdivisions.
FRBO – For Rent By Owner
Property that is for rent by owner instead of a property management company.
RTO – Rent-To-Own
Tenant renting from the landlord with a mutual agreement in place to eventually purchase the property prior to the lease expiring.
LOC – Line of Credit
A line of credit is a preset borrowing limit that can be used to purchase and rehab properties.
PSA – Purchase and Sales Agreement
A contract between the Buyer and Seller confirming both parties are agreeing to buy or sell.
P&I – Principal and Interest
Principal is the amount of money borrowed and interest is the amount it cost to borrow the money. P&I payments are usually spread across a predefined amortization schedule
CTC – Clear to Close
When a lender has finished reviewing a file and all conditions are met the file will be considered ready to fund or cleared to close.
LTC – Loan to Cost
Similar to LTV but, the cost will include the whole cost of the project
SoW – Scope of Work
A document explaining all of the work that will be done to the project
PoF – Proof of Funds
Similar to a pre-approval. A letter stating that there are funds available to dedicate to the project assuming all conditions are met for financing.
PFS – Personal Financial Statement
A document outlining an individual’s financial position
CPL – Closing Protection Letter
A contract between title insurance and a lender added more protection to the insured party(typically the lender/buyer).
EOI – Evidence of Insurance
A copy of your insurance policy proving you have insurance.
CLA – Conditional Loan Approval
A statement from the lender stating they are able to close as long as certain conditions are met.
ACH – Automated Clearing House
Lender wants to be able to draw or add money directly from or to your account.
PPP – Pre-Payment Penalty
If you pay off a loan before an agreed pre-payment date you may have to pay more or all of the interest per that schedule. IE – 3 year pre-payment means that at year 1, if you pay off your note you will have to pay 3% of the remaining loan amount, at year 2, if you pay off your note you will have to pay 2% of the remaining loan amount. How much do you have to pay at year 3? Leave a comment below!
CoO – Certificate of Occupancy
A certificate confirming that the property is up to code and livable, typically provided by an inspector from the city.
LFC – Legacy Frontline Capital
A lender and broker that can help with all of your funding needs! Contact LFC
LFH – Legacy Frontline Homes
Will help you through tough situations whether you are selling or buying! Contact LFH
LFT – Legacy Frontline Team
All together we can help you, buy, sell, or fund. Contact LFT
SoS – Secretary of State Entity Document
A letter confirming your entity is legal.
CoGS – Certificate of Good Standing
A document showing that a business is legally operating in a state.
SSN – Social Security Number
US Citizens Personal Serial Number
BPO – Broker Price Opinion
Estimated value of a property based on the opinion of a real estate broker or other qualified entity
Yes, memorizing the meaning of all of these takes time! If you hear an acronym you are unsure of, ask! If you don’t feel comfortable asking, Google it. You’ll find something. Remember, if you need help buying, selling, or funding your deals.. CALL US! We would be happy to help you!
Thanks for reading, we hope you learned something!
– Legacy Frontline Team