Real Estate Investing

Real Estate Investing Terms

Metrics for evaluating rental properties, commercial real estate, and investment returns including cap rate, NOI, and DSCR.

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Last updated Oct 2026
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BRRRR Return

Measures what percentage of original cash invested is recovered through a cash-out refinance after the Buy, Rehab, Rent, Refinance, Repeat cycle.

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Cap Rate

The ratio of a property's net operating income to its market value, expressing the expected return on an all-cash real estate investment.

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Cash-on-Cash Return

The ratio of annual pre-tax cash flow to total cash invested, measuring the leveraged yield on a real estate investment.

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DSCR

The ratio of a property's net operating income to its annual mortgage payments, used by lenders to determine whether a property qualifies for financing.

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50% Rule

A rule of thumb estimating that approximately 50% of a rental property's gross rent is consumed by operating expenses — excluding mortgage payments.

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Gross Rent Multiplier

The ratio of a property's purchase price to its annual gross rental income, used as a quick screening tool before deeper due diligence.

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NOI

Annual gross income from a property minus all operating expenses, excluding mortgage payments, taxes on income, depreciation, and capital expenditures.

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1% Rule

A quick-filter rule that says monthly rent should be at least 1% of the purchase price for a rental property to generate positive cash flow.

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2% Rule

A strict real estate screening rule stating monthly rent should be at least 2% of the purchase price, targeting high cash-flow investment properties.

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Vacancy Rate

The percentage of available rental time during which a property or unit is unoccupied and generating no rental income.