ARV
After Repair Value
What the property will appraise or sell for after all renovations are complete. The foundation of every offer calculation.
MAO
Maximum Allowable Offer
The highest price you can pay and still hit your target return. Cross this line and the deal stops working.
MAO = (ARV × 0.70) − Rehab
CoC
Cash-on-Cash Return
Annual cash flow divided by total cash invested. The honest measure of how hard your money is working.
CoC = Annual Cash Flow ÷ Cash In
DSCR
Debt Service Coverage Ratio
Net operating income divided by annual debt payments. Below 1.0 means the rent doesn't cover the loan.
DSCR = NOI ÷ Annual Debt Service
NOI
Net Operating Income
Gross rents minus operating expenses — but BEFORE debt service. The number every lender and appraiser cares about most.
BRRRR
Buy, Rehab, Rent, Refinance, Repeat
The strategy of forcing equity through renovation, then pulling your capital back out via cash-out refinance to do it again.
CAP
Capitalization Rate
NOI divided by purchase price. A market-comparison number — useful for sanity checks, less useful for individual deal returns.
Cap Rate = NOI ÷ Purchase Price
LTV
Loan-to-Value
Loan amount as a percentage of property value. Lower LTV = more skin in the game = better rates.
PITI
Principal, Interest, Taxes, Insurance
The full monthly nut on a financed property. WI investors should add ~30-40% to PITI for total true cost.
PMI
Private Mortgage Insurance
A monthly premium lenders require when LTV exceeds 80%. Avoid it on investment property if you can.
PM
Property Management
Always underwrite as if you're paying for management — even if you self-manage. Your time has a number.
EMD
Earnest Money Deposit
Your good-faith deposit at offer. In WI, typically $1K–$5K. Structure contingencies properly or this disappears.