Whether you're new to investing in real estate or have already built a successful portfolio, you'll see plenty of acronyms and abbreviations when navigating the real estate market. From interpreting property listings to listing and marketing your own rental properties or house flipping projects and managing your goals, it's critical to understand these real estate abbreviations acronyms!
Here are ten common combinations of letters and numbers mean to get familiar with when learning how to start investing in real estate.
1. What Does "HOA" Mean?
These letters together stand for Homeowner's Association. If the property you're considering buying is part of an HOA, you'll be responsible for paying monthly or yearly dues that go towards maintaining the common areas of the complex.
While some property investors might prefer to avoid investment properties in an HOA, these associations are not necessarily a bad thing for your bottom line. When purchasing a home in an HOA, review the covenants and make sure property renovations comply. If you operate rental properties in HOAs, work with your tenants to understand and follow the rules.
2. The MLS
The MLS (or Multiple Listing Service) is a database of all available properties for sale in a given area. Real estate agents use it to find homes for their clients. Real estate investors also use this resource to buy and sell properties and build successful portfolios!
When using the Privy platform, a real estate investor gains access (and experienced insights) into the MLS for multiple markets.
3. What Is An "LLC?"
An LLC (Limited Liability Company) is a type of business structure that provides personal liability protection for its owners. In the event that the company is sued, the owners' personal assets cannot be seized to pay off any business debts.
LLCs are popular among real estate investors because they offer a high level of protection and are relatively easy to set up and manage.
4. Are You An "REI?"
Short for "real estate investor," an REI is someone who makes money from investing in real estate. This could be buying and selling properties, developing real estate properties, or renting out property units.
There are many different ways to become a successful REI. Some people prefer buy-and-hold rental properties while others stick to fix-and-flip investments. Whichever strategy you choose, remember that real estate investing is a long-term game! Building an "REI" team can help support your success.
5. Is Your Next Property an "SFH?"
This acronym stands for "single-family home." These are detached homes that usually have a yard and aren't attached to any other dwellings. When reviewing real estate investment listings, "SFH" tells you that the property isn't a multi-family residence, like an apartment building, condo, or duplex.
Many new investors considering becoming a landlord prefer properties like these to rent out to tenants.
6. FSBO Properties
FSBO stands for "For Sale By Owner." These are properties being sold without the help of a real estate agent on the seller's side. While there are some benefits to buying FSBO properties (like avoiding commission fees), it's important to be aware of the risks as well.
Partner with a good buyer's agent and use the Privy platform to find good properties and avoid costly mistakes when dealing with FSBO properties.
7. Keep an Eye on Your NOI
NOI (or Net Operating Income) is a calculation of how much money a property brings in each year after all expenses are paid. This metric can be helpful for rental property investors when comparing different investment opportunities.
It's essential to keep an eye on the NOI because it can give investors a good indication of how profitable a property will be in the long run.
8. Know Your ROI
Another critical "real estate investing 101" metric is ROI. This abbreviation is short for "return on investment." It's one of the most important metrics to consider when making decisions about your current or potential real estate investments.
ROI tells property owners how much money they've made (or lost) on an investment relative to how much money they put in. It's usually expressed as a percentage or ratio.
9. Keep Up With The COCR
COCR stands for "cash on cash return." Property investors use this metric to keep an eye on the returns a property generates compared to mortgage payments during the year.
It's important to keep up with the COCR (in addition to ROI) when investing in properties using any kind of financing. While it’s similar to evaluating ROI, it’s a separate metric that investors use when analyzing profitability.
10. "NOO" Properties Only, Please!
NOO stands for "non-owner-occupied." These are properties that aren't lived in by the owner. They're usually investment properties, like rental properties or vacation homes.
When looking at listings, be sure to pay attention to whether a property is NOO or not. This designation can significantly impact things like insurance rates and tax implications.
Make Smart Ral Estate Investments With Investor Insights from Privy!
There you have it! You've just read a quick guide to some of the most common acronyms and abbreviations you'll need to know for investment property success. Remember, real estate investing is a long-term game. So, don't get discouraged if you don't achieve overnight success with your first rental property or fix-and-flip. Instead, keep learning, growing, and building your portfolio one property at a time.
When you're ready to start searching for your next investment property, check out Privy! Our platform connects property investors with the best properties that meet their criteria. Reach out soon to learn more!
More of our best real estate investing tips are in our free ebook! Download your free copy of “How to Invest In Real Estate: A Guide!”