The Lingo

A summary of terms investors use

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

Buy and Hold - exactly as it says. Buy a home, 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 property

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 proceeds from the sale fall short of the balance owed on a loan secured by the property 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.