The wholesaling glossary

70% Rule

The 70% rule says an investor should pay no more than 70% of a property's after repair value minus rehab costs.

Absentee Owner

An absentee owner is a property owner who does not live at the property, identified in county records by a mailing address that differs from the property address.

ARV (After Repair Value)

ARV (after repair value) is the estimated market value of a property once all repairs and renovations are complete.

Assignment Fee

An assignment fee is the amount a wholesaler is paid for transferring (assigning) their purchase contract rights to an end buyer.

Assignment of Contract

An assignment of contract is a legal agreement transferring a buyer's rights and obligations under a purchase contract to a new buyer, who closes in their place.

BRRRR

BRRRR — Buy, Rehab, Rent, Refinance, Repeat — is a strategy where an investor recycles the same capital into rental after rental by refinancing at the property's new value.

Buy and Hold

Buy and hold is an investing strategy where a buyer purchases rental property and keeps it long term for cash flow, loan paydown, and appreciation.

Buy Box

A buy box is the specific set of criteria — location, property type, price range, and deal type — that defines what an investor will buy.

Buyers List

A buyers list is a wholesaler's database of investors — with contact information and buying criteria — who are ready to purchase the deals the wholesaler contracts.

Cap Rate

Cap rate (capitalization rate) is a property's net operating income divided by its purchase price, expressed as a percentage.

Cash Buyer

A cash buyer is an investor who can purchase a property without a mortgage contingency, closing with cash or cash-equivalent funds like hard money.

Cash Flow

Cash flow is the money a rental property generates each month after all operating expenses and the mortgage payment are paid.

Cloud on Title

A cloud on title is any unresolved claim, lien, or defect in a property's ownership record that puts clean ownership in question.

Co-Wholesaling

Co-wholesaling is a partnership where one wholesaler with a property under contract teams up with another who has the buyer, and the two split the assignment fee.

Comps (Comparable Sales)

Comps (comparable sales) are recently sold properties similar in location, size, and condition to a subject property, used to estimate its market value.

Creative Finance

Creative finance is any method of buying real estate outside a standard bank mortgage — including seller financing, subject-to, lease options, and wraparound loans.

Daisy Chain

A daisy chain is when a wholesale deal gets re-marketed by people who have no contract with the seller, each middleman adding a markup as it passes down the line.

Deed of Trust

A deed of trust is a recorded document that pledges a property as collateral for a loan, using a neutral trustee instead of a traditional mortgage.

Dispo (Disposition)

Dispo, short for disposition, is the selling side of wholesaling — finding a buyer for a contracted deal and getting it to the closing table.

Distressed Property

A distressed property is one under physical or financial pressure — major repair needs, missed mortgage payments, foreclosure, or liens — that typically sells at a discount to cash buyers.

Double Closing

A double closing is two back-to-back transactions in which a wholesaler buys a property from the seller and immediately resells it to an end buyer, briefly taking title.

Driving for Dollars

Driving for dollars is a lead-generation method where investors drive through neighborhoods looking for visibly neglected properties, then track down and contact the owners.

DSCR Loan

A DSCR loan is a rental property loan qualified on the property's rental income versus its debt payment, rather than the borrower's personal income.

Due-on-Sale Clause

A due-on-sale clause is a mortgage provision giving the lender the right to demand full repayment of the loan when the property is sold or title transfers.

Earnest Money

Earnest money is a good-faith deposit a buyer puts up when signing a purchase contract, held in escrow and credited at closing or forfeited if the buyer walks.

Equitable Interest

Equitable interest is the legal stake a buyer gains in a property by signing a purchase contract, before taking actual title at closing.

Escrow

Escrow is an arrangement where a neutral third party holds money and documents during a real estate transaction, releasing them only when the agreed conditions are met.

Fix and Flip

Fix and flip is an investing strategy where a buyer purchases a distressed property, renovates it, and resells it for a profit.

Gross Rent Multiplier (GRM)

Gross rent multiplier (GRM) is a property's purchase price divided by its gross annual rent — a quick screening ratio for rental deals.

Gross Yield

Gross yield is a rental property's annual rent divided by its purchase price, expressed as a percentage.

Hard Money Loan

A hard money loan is a short-term, asset-based loan from a private lending company, secured by the property and used by flippers and other investors who need speed.

Inspection Period

An inspection period is the contractual window after signing during which a buyer can inspect a property and cancel the contract, typically with their earnest money refunded.

Land Contract

A land contract is a seller-financing agreement where the buyer pays for the property in installments and the seller keeps legal title until the balance is paid off.

Lease Option

A lease option is a rental lease paired with an option giving the tenant the right — but not the obligation — to buy the property at a set price within a set period.

Lien

A lien is a legal claim recorded against a property that secures a debt, which generally must be paid off before the property can transfer with clean title.

Maximum Allowable Offer (MAO)

Maximum allowable offer (MAO) is the most an investor can pay for a property and still hit their required profit, classically calculated as 70% of ARV minus rehab costs.

Memorandum of Contract

A memorandum of contract is a short document recorded in county land records to give public notice that a purchase contract exists on a property.

Motivated Seller

A motivated seller is a property owner whose circumstances make a fast, certain sale worth more than getting top dollar.

Net Operating Income (NOI)

Net operating income (NOI) is a rental property's income minus its operating expenses, calculated before any mortgage or loan payments.

Novation

Novation is the substitution of a new contract or party for an existing one, with all parties' consent, extinguishing the original obligation.

Off-Market

An off-market property is one being sold without a public listing on the MLS or major listing sites.

Pre-Foreclosure

Pre-foreclosure is the period after a borrower defaults on their mortgage but before the property is sold at a foreclosure auction, while the owner can still sell.

Private Money

Private money is real estate financing lent by individuals — friends, family, or other investors — rather than a bank or a hard money company.

Probate Property

A probate property is real estate from a deceased owner's estate that is being transferred or sold through the probate court process.

Promissory Note

A promissory note is the written promise to repay a loan, spelling out the amount owed, interest rate, payment schedule, maturity date, and default terms.

Proof of Funds (POF)

Proof of funds (POF) is documentation — usually a bank statement or lender letter — showing that a buyer actually has the money to close a purchase.

Quitclaim Deed

A quitclaim deed transfers whatever ownership interest the grantor has in a property — if any — with no warranties or guarantees about the title.

Rehab Cost

Rehab cost is the total estimated expense to repair and renovate a property to reach its after repair value.

REO (Real Estate Owned)

An REO (real estate owned) property is one that went through foreclosure, failed to sell at auction, and reverted to the lender, which then sells it as bank-owned inventory.

Sandwich Lease

A sandwich lease is a strategy where an investor leases a property from the owner with an option to buy, then subleases it to a tenant-buyer at a higher rent with a higher-priced option.

Section 8

Section 8 is the federal Housing Choice Voucher program, in which a local housing authority pays part or all of a tenant's rent directly to the landlord.

Seller Finance

Seller financing is a deal where the property seller acts as the lender, letting the buyer pay in installments instead of getting a bank mortgage.

Settlement Statement

A settlement statement is the itemized document at closing that lists every charge, credit, and payout for both sides of a real estate transaction.

Short Sale

A short sale is a property sale in which the lender agrees to accept less than the full loan balance as payoff so the sale can close.

Skip Tracing

Skip tracing is the process of finding a property owner's current contact information — phone numbers, emails, or mailing addresses — from public and commercial data sources.

Subject-To

Subject-to is a purchase where the buyer takes title to a property while the seller's existing mortgage stays in place and the buyer makes the payments.

Title Company

A title company is a neutral firm that searches a property's ownership history, issues title insurance, holds escrow funds, and conducts the closing.

Transactional Funding

Transactional funding is a short-term loan — often lasting only hours — that funds the first leg of a double closing and is repaid the same day from the second closing.

Turnkey Property

A turnkey property is a rental that is fully renovated and ready to produce income immediately — often sold with a tenant and property management already in place.

Vacancy Rate

Vacancy rate is the percentage of time a rental property sits empty, or the share of units in a market that are unoccupied.

Warranty Deed

A warranty deed transfers ownership of a property along with the seller's legal guarantee that the title is clear of undisclosed claims.

Wholesaler

A real estate wholesaler is an investor who puts a property under contract at a discount, then sells the rights to that contract to an end buyer for a fee.

Wraparound Mortgage

A wraparound mortgage is a seller-financing structure where the seller keeps their existing loan in place and carries a new, larger note for the buyer that wraps around it.