Glossary
Real-estate underwriting borrows vocabulary from accounting, finance, and lending, and most of it sounds more intimidating than it is. Here are the terms you'll see on Deelva, in plain English, with a quick example where it helps.
verb · the work Deelva does for you
The process of evaluating whether a deal makes financial sense before you commit. For a rental property, underwriting means: pull the rent, pull the expenses, model the financing, project a few years forward, and ask. Does this clear my target return after all the math?
In practice: The summary card on every Deelva listing is the underwriting result. The Investment Assumptions panel is the inputs that drive it.
also: monthly cash flow, net cash flow
What's left in your pocket after rent comes in and every bill goes out. Mortgage, taxes, insurance, HOA, maintenance, capex reserve, vacancy reserve, and management. Positive cash flow means the property pays you. Negative means you cover the gap.
Example: Rent $3,800 − PITI $2,600 − HOA $500 − reserves $300 = $400/month positive cash flow.
also: cash yield, year-one return
Annual cash flow divided by the cash you put in at closing (down payment + closing costs + any prep). It's the return on the dollars you actually wrote a check for. The cleanest first-year apples-to-apples comparison between deals.
Example: $4,800/year cash flow ÷ $96,000 cash invested = 5.0% cash-on-cash.
short for: capitalization rate
Net Operating Income (NOI) divided by the property's price. The unlevered yield, before any financing. Cap rate tells you what an all-cash buyer would earn. Useful for comparing properties across markets without the mortgage muddying the picture.
Example: $18,000 NOI ÷ $400,000 price = 4.5% cap rate.
Effective rent minus all operating expenses, but before mortgage payments and income tax. NOI is the property's earning power on its own. How it would perform with no loan. Cap rate is built on top of NOI.
Includes: taxes, insurance, HOA, maintenance, capex reserve, management, vacancy. Excludes: mortgage P&I.
NOI divided by annual mortgage payments. A DSCR of 1.25 means the property's net operating income covers the mortgage 1.25× over. The lender's standard buffer. Under 1.0 means rent doesn't cover the loan.
Lender floors: DSCR loans typically require ≥ 1.25. Conventional investor loans test your DTI instead and only use DSCR as a sanity check.
The annualized return on your invested cash over the full holding period, accounting for both ongoing cash flow and the sale proceeds at the end. IRR is the single number that captures “what did this deal actually return me, all-in.”
Example: Deelva's 10-year projection compares the IRR of holding-and-selling against the unlevered cap rate so you can see how much of the return is leverage vs. the property itself.
A reserve for the time your unit sits empty between tenants. Expressed as a percentage of gross rent. Deelva defaults to 3% for stabilized Hudson County condo/co-op stock. Meaning we assume the unit is empty roughly one month every three years.
A reserve for the big-ticket replacements that hit every 5–20 years: roof, HVAC, kitchen, bathrooms, water heater. CapEx is separate from routine maintenance. These are items you save up for, not bills you pay every month.
Default: 2% of effective rent for condo/co-op buildings (HOA reserves cover the big shared systems).
Routine repairs that come up every year. Busted appliances, paint between tenants, small plumbing fixes. Different from CapEx (the major systems). Deelva defaults to 3% of effective rent.
A fee paid to a third party to handle tenants, repairs, and rent collection. Typically 8–10% of gross rent. Off by default in Deelva. Small investors usually self-manage. Toggle it on if you're modeling a hands-off deal.
Principal + Interest + Taxes + Insurance. The four parts of a standard mortgage payment. When lenders ask “what's your total housing cost?” PITI is the answer.
Monthly fee paid by condo and co-op owners to fund building maintenance, reserves, staff, amenities, and shared insurance. Listed separately from your mortgage payment, but functionally part of your monthly carrying cost.
Hudson County reality: HOAs of $500–900/month are common on new condo stock and can swing a deal from cash-flow-positive to cash-flow-negative.
The annual rate at which the property's market value grows. Deelva defaults to 4%/year for Hudson County. It compounds. A $400k property at 4%/yr is worth ~$592k in 10 years.
The annual rate at which market rent climbs. Independent of appreciation: Rents and prices can move at different paces. Deelva defaults to 3%/year.
The size of your loan as a percentage of the property's value. 25% down = 75% LTV. Lenders cap LTV based on loan type: investor conventional ≤ 75%, DSCR loans ≤ 80%, FHA owner-occupier ≤ 96.5%.
The cash you put toward the purchase, the rest financed by a mortgage. Investor minimum is 25% on conventional loans. Deelva defaults to 25%. The standard you can underwrite against without surprise overlays.
One-time fees paid at the closing table. Lender origination, title insurance, attorney, recording, inspection, appraisal, NJ transfer tax. Deelva defaults to 3% of purchase price as a reasonable all-in estimate for NJ.
New Jersey assesses an extra 1% on the buyer when the purchase price is $1M or higher. Deelva adds this automatically to your “cash invested” line on deals over $1M.
The monthly rent at which your cash flow is exactly $0. You're not making money but you're not losing money either. If breakeven rent is lower than market rent, the deal cash-flows. If higher, it doesn't.
Purchase price divided by annual gross rent. A rough screening shorthand: a GRM of 15 means the property costs 15× the annual rent. Useful for back-of-envelope, but it ignores expenses entirely. Never use it as the only number.
An old screening shortcut: monthly rent should equal at least 1% of the purchase price. A $400k property “passes” the 1% rule if it rents for $4,000/month or more. It badly overstates returns on NJ condos (ignores HOA + tax) and Deelva shows it only for reference.
What you'd actually pay, not what the seller is asking. Deelva lets you set an offer price below list and re-runs every metric at that price. So you can find the price at which the deal works.
The minimum first-year return on cash you'd accept. Set yours in the offer-strategy card, and Deelva solves backwards for the offer price that hits that target. Default: 5%.
A borrower's total monthly debt payments divided by gross monthly income. Conventional lenders cap DTI around 43–45%. Distinct from DSCR: DTI is about you, DSCR is about the property.
An investor loan that qualifies based on the property's DSCR (≥ 1.25 typical) rather than your personal income. Faster to close, no W-2 documentation, but higher rate (~0.5–1.0% above conventional) and 20–25% down minimum.
A Fannie/Freddie-conforming loan for non-owner-occupied property. 25% down minimum, full W-2 + tax-return documentation. Cheaper rate than DSCR but slower to close and tougher to qualify if you're self-employed or already carry mortgages.
A government-insured loan with 3.5% down minimum, but only for properties you'll live in. Common “house-hack” play: buy a duplex/triplex, live in one unit, rent the others. Mortgage insurance for the life of the loan.
Buying without a mortgage. No DSCR concerns, no interest expense, but a much larger upfront cash outlay. So cash-on-cash drops substantially. Common for high-yield small-dollar deals or aggressive bidders trying to win a competitive close.
Replacing your existing mortgage with a new one, usually to lower the rate or pull cash out of the property's appreciated value. Deelva doesn't currently model refis. The 10-year P&L assumes the original loan stays in place.
An IRS provision that lets you defer capital gains tax by rolling proceeds from one investment property into another (“like-kind”) within strict deadlines: identify the replacement in 45 days, close in 180. Not modeled in Deelva; relevant when you're planning your exit strategy across multiple properties.
Everything you pay to keep the property running. Taxes, insurance, HOA, maintenance, capex reserve, management, vacancy reserve. Excludes mortgage payments (those are debt service, not operating).
The headline monthly rent before any deductions. What the lease says. Effective rent is what you actually collect after the vacancy reserve.
Gross rent minus the vacancy reserve. The line right above operating expenses in a proforma. Deelva uses this as the base for percentage-based reserves like maintenance and capex.
Your mortgage payment. Principal + interest only (taxes and insurance are operating expenses, not debt service). Annual debt service is the denominator in DSCR.
A flipper's term: what the property is worth after you renovate. Deelva doesn't model rehab spend or ARV. We focus on buy-and-hold rentals where most Hudson County listings are already rent-ready.
Missing a term? and we'll add it.