The Real Estate investment market is in constant change and you really should know this information, to understand the highest potential performance, to maximize your return on investment, for your portfolio.

If you have a residential real estate portfolio and want a portfolio performance review, we are happy to provide that information for you! Having a properly positioned real estate client is our ultimate goal. Many accountants, bookkeepers or software programs just give you data (I've unfortunately found, through past experience). They don't tell you the important stuff! Is this property performing at its optimal return? Am I maximizing my depreciation/expenses? Am I realizing the highest ROI for this property? Is the cost benefit, and return on investment, capital expense, worthwhile on this property; should I do upgrades to improve the rent roll? or should I exit with a 1031?

As you explore financing options to expand your investment portfolio, especially DSCR loans and the BRRRR strategy, understanding key abbreviations is paramount. Here's a breakdown of the top 10 abbreviations you'll encounter:

DSCR (Debt Service Coverage Ratio): The pivotal metric in DSCR loans, this ratio gauges a property's cash flow by comparing net operating income (NOI) to total debt service (including PITI). A DSCR above 1.00 signifies positive cash flow.

LTV (Loan-To-Value Ratio): This ratio contrasts the loan amount with the property's value, influencing loan terms. Lower LTV ratios mean less risk and better rates.

PITI (Principal, Interest, Taxes, Insurance): PITI encapsulates a mortgage payment, incorporating principal, interest, property taxes, and insurance costs.

ARM (Adjustable Rate Mortgage): Unlike fixed-rate mortgages, an ARM offers variable interest rates tied to an index, potentially affecting your payments.

STR (Short-Term Rental) & LTR (Long-Term Rental): Two different rental strategies that often follow varying underwriting rules. 

ARV (After Repair Value): ARV estimates a property's worth post-renovation, crucial for the BRRRR strategy.

ROI (Return on Investment): ROI calculates investment profitability relative to its cost, crucial for assessing BRRRR success.

REO (Real Estate Owned): REO properties are lender-owned after foreclosure, often tied to BRRRR acquisitions.

BRRRR (Buy, Rehab, Rent, Refinance, Repeat): This is the popular method where an investor buys a property under market value, rehabs it, builds equity, rents it out and refinances it using a DSCR loan to pull out equity for the next deal! 

PPP (Prepayment Penalty): This is a tool used by lenders to reduce interest rates. A prepayment penalty penalizes a borrower from refinancing or selling a property within the timeframe outlined. 

Equipping yourself with these abbreviations empowers you to make educated financing choices in DSCR loans, BRRRR strategy, and more. If you need further clarity or wish to delve into these strategies, feel free to reach out.

If you are investing in commercial real estate or multifamily (5+ units), we can also help with more detailed and appropriate information for your asset class. (CLICK HERE). Especially when nearing your (12-36 months) exit, there are serious consideration that should be made. We are ready to help you position yourself for the best possible exit.