Real estate investing, in plain English.

A 1031 exchange (named for IRS Code Section 1031) lets an investor sell an investment property and defer capital-gains taxes by reinvesting the proceeds into another like-kind investment property under strict deadlines.

The 70% rule says a house flipper should pay no more than 70% of a property's after-repair value (ARV) minus repair costs. It builds in roughly a 30% margin to cover holding costs, selling costs, financing, and profit.

After-repair value (ARV) is the estimated market value of a property after all planned renovations are complete. Investors use ARV to decide what to pay for a fixer-upper and to project profit on a flip or BRRRR deal.

BRRRR is an investing strategy: buy a distressed property below market value, rehab it, rent it out, refinance based on its new value to pull your cash back out, then repeat with the same capital.

Cap rate is a rental property's net operating income (NOI) divided by its purchase price, expressed as a percentage. It measures the property's unlevered annual return and lets investors compare deals independent of financing.

Cash-on-cash return is a property's annual pre-tax cash flow divided by the total cash actually invested (down payment, closing costs, and rehab). It answers: what yield am I earning on the money I put in?

A DSCR loan is an investment-property mortgage underwritten on the property's debt-service coverage ratio — its rental income divided by its loan payment — instead of the borrower's personal income or tax returns.

A distressed property is one under financial or physical pressure — pre-foreclosure, tax delinquency, probate, or serious disrepair — that typically sells below market value because the owner needs speed or the house needs work.

Gross rental yield is a property's annual rent divided by its purchase price, expressed as a percentage. It's the fastest way to screen and compare rental markets before running full expense numbers.

House hacking is buying a property, living in part of it, and renting out the rest so tenant income covers some or all of the mortgage. It lets first-time investors buy with low owner-occupant down payments.

An off-market property is one for sale (or about to be) that is not listed on the MLS. Investors target off-market deals because less competition and motivated sellers usually mean below-retail pricing.

Wholesaling is contracting a property (usually off-market and below market value) and then assigning that contract to an end buyer — typically an investor — for an assignment fee, without renovating or usually even owning the property.