The Lingo

A summary of terms investors use

Flipping, also known as rehabbing - taking a run down home and cleaning, fixing and polishing it up to sell quickly and for a profit

Buy and Hold - exactly as it says. Buy real estate, rent it and in the long term sell for a large profit

Cash flow - when your passive income exceeds your expenses. Example: Your tenants pay $1500 a month but your total expenses on the property are $1000 a month. You are cash flowing $500 a month

R.O.I. - Return on Investment. The equation looks like this. ((invested amount - profit)/invested amount) * 100

Vendor buy back - When a seller loans you money back at a percentage rate

Asset - An item of economic value

Liability -An obligation to settle a debt. Something that DOES NOT make you money. Instead it takes your money

Mortgage - A loan to buy real estate

Debt Service - Monies that need to be paid for interest and principle. In Real Estate investing this is taking a monthly loss to buy that property that will pay much more over the long term

Lease Option - Lease a home with the option to purchase. In essence this is "rent to own".

Short Sale (Canada) - a sale of Real Estate in which the amount generated from the transaction falls below the balance owing on a mortgage or loan secured by the real estate that has been sold. So you would ask the bank on behalf of the person with the mortgage if you can pay their loan at a discount and take the property.