Amortization: Loan amortization is the liquidating the loan over time by making payments. Amortization is calculated by taking the the total mortgage payment then subtracting the interest on the loan payment. This gives you the amortization. Example: You make a monthly payment of $1000 each month on the mortgage. At the end of the year the bank reports that you have made $10,000 in interest payments over the year. Which gives you the amortization of $2000.

APN: Assessor's Parcel Number is a number assigned to each tract of land by the Tax Assessor. The APN can be used to identify the land or property.

Appraised Value: The appraised value is the set value for the security of the loan of that property. It gives the value in the loan so that there is collateral and the loan is secure in case of default against the bank. It usually is based on (compareables) similar houses in the current market and location. This is done by an independent company so no bias is created by any party in the transaction.

Appreciation: Is a term used in accounting relating to the increase of value of an asset. In real estate its the land or buildings that show increase in value over the years.

APR: The Annual percentage rate describes the interest rate the borrower will pay on a loan, taking into account one time fees. The APR is the total cost of the credit to the consumer expressed as an annual percentage of the amount of credit given. APR is intended to make it easier to compare lenders and loan options.

Assessed Value: See Improvements.

Assumption: The act of taking over of the primary liability for the payment of an existing mortgage or trust deed loan. *

AVM: Assessed Value Market. This is the comparison of that property compared to other loans that have been done on similar properties in the area. This is based from the loan underwriter in the bank and not on an appraisal.

BTCF: Before tax cash flow is the annual cash flow taken into account before income taxes, depreciation and other tax deductions. Before tax cash flow is equal to the property's annual net operating income (NOI) subtracting the annual debt service.

Cash on cash return: Cash on cash return would be best described as the interest you receive on a property determined by the initial investment.

For example if you deposit $100,000 on the property and over the year make $10,000 in income (cash flow) from the property by renting or leasing it out you made %10 on your initial investment.

This concept only includes cash made during the investment. It does not take into consideration the appreciation of the property value. So therefore, if you are evaluating a property investment on a long term basis, you need to focus more on the annual cash flow of the property and less on the property appreciation.

CBSA: (Core Based Statistical Area) A system to help group zip codes in a usable data base.

Census Block: A census block a numbered system which is the smallest geographic unit used by the United States Census Bureau used for census tabulation purposes. The blocks make up block groups of houses which make up census tracts. There are 39 blocks per group on average. Blocks usually have a 4 digit number and the first number usually indicates which block group the block is in.

Census Tract: A census tract or census district is a specific community outlined for the purpose of taking a census. Usually the boundaries coincide with city limits or town limits.

Debt ServiceThe minimum monthly payment paid on the mortgage including principal and interest.

Depreciation: The loss of value in the improvements of the property. It is considered that land stays the same value so you may see that they property is divided in 2 parts. Land and improvements. The land's value normally doesn't depreciate. The improvements can however due to different circumstances. Therefore for value and tax purposes depreciation is taken into account and appraisals and assessed values can be done.

DOM: Stands for Days on Market. This is the number of days a property has been for sale.

HPI: HPI stands for House Price Index. HPI is a broad measure of fluctuation of prices in single family homes. The HPI measures average price changes in repeat sales or refinancing on the same property. The HPI is an indicator of current house price trends in various areas and gives a gauge which provides a tool for housing economists that is useful in estimating changes in the rates of mortgages, defaults, prepayments, and housing affordability in those areas.

HUD: United States Department of Housing and Urban Development, often abbreviated HUD, is a cabinet of federal government staff. It was founded in 1965 to develop and execute policy on housing and cities. It now concentrates primarily on housing. The purpose HUD was to help solve housing problems. HUD has different laws and programs designed to accomplish its purpose.

HUD FMR: HUD Fair Market Rents. These are the rents that have been researched for a given geographical area. The FMRs are computed using data on rent distributions from a census from that demographic zone. This program is also known as Section 8.

Improvements: The building Property taxes are based on the assessed value of your property. Property tax bills show land and improvement values. Improvements include all assessable buildings and structures on the land. It does not necessarily mean that you have recently “improved” your property.

Internal Rate of Return: IRR is an investment decision tool, and is used to decide whether a single project is worth investing in.

For an income producing property the IRR calculation uses the initial amount invested in the property, plus a series of projected cash flows which are usually after-taxes, and a projected after-tax sales proceeds amount in a given year.

If you calculate the internal rate of return for an income producing property five years in the future, you would use the amount initially invested or the amount of money put down on the property, the projected after-tax cash flows for each of the five years in the future and the sale of the property anticipated after-tax sales proceeds in year five, the final year, to calculate an average yearly return on your initial investment amount over the five-year period. This calculation gives you the internal rate of return for that property.

Listing Agent: The agent that is representing the seller of a property for sale. The listing agent is the agent on the listing contract and follows the rules and guidelines therein.

Listing Contract: A listing contract is a contract between a real estate broker (or an agent acting on behalf of the broker) and a seller or real property to give the right to the broker to offer the property for sale. The contract is also called a listing agreement. Each listing can go onto the MLS so that the information can be shared with other agents and brokers.

Market Rent: Market rent is the level that other similar properties are renting at, factoring in adjustments for the time of year, condition of the property, the location, improvements made of the property etc.

Mello Roos Fee: Mello-Roos is the common name for certain taxes in an area that get charged to home owners by the Community Facilities District Act, by California Legislature in 1982. The name comes from its co-authors, Senator Henry Mello of the Monterey area and Los Angeles assemblyman Mike Roos. Mello-Roos enabled “Community Facilities Districts” (CFD’s) to be established by local government agencies as a means of obtaining community funding. These taxes cover for example streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police protection to newly developing areas. The tax you pay is used to make the payments of principal and interest on the bonds.

MLS: is the Multiple Listing Service used in real estate. It allows real estate brokers who are presenting sellers under a listing contract to share information about properties with other real estate brokers who may represent a buyer for that property. There are many properties on the MLS and there is an MLS for each geographical area. It is a data base that is used in and with real estate brokers and agents.

MLSID: The Identification number given to the property for sale that is assigned by the MLS.

NOI: Net Operating Income is the investement's income after operating expenses are deducted. If this is in the positive it is referred to as NOI and if it is in the negative it is referred to as NOL, Net Operating Loss.

OFHEO: The Office of Federal Housing Enterprise Oversight. This office was established as an independent entity within HUD. The purpose of this office is to support a strong national housing finance system by making sure that the Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation) programs work to ensure that the capital adequacy are secure and sound.

Rentometer: Rentometer is a tool that is used to help determine the current rental comparisons of similar properties in an area. It is a good tool to use if you plan on making your property a cash flow property. This will help you determine the actual rent to charge someone. We have on our website 3 options with the Rentometer. Low, Medium and high. Each figure is useful to see what the rents are in the areas concerned. You will see the actual high rents, medium rents and low rents of the area that property is in so that you have a guide to help gauge what you should rent your property for.

Schedule E: Schedule E is used to report income or loss from rental real estate, royalties, partnerships, estates and trusts.

Section 8 (housing): This is a type of federal assistance provided by HUD creating housing for low income based families. It is commonly known as SECTION 8, the portion of the U.S. Housing Act of 1937 which is where the program was authorized.

SFD: Single family dwelling. As compared to a unit that can hold more than one family. Like a duplex or an apartment complex.

RSFR: Residential Single Family Residence.

Trend: To have a general tendency, as events, conditions etc.