Real Estate & Investing Terms, Explained
Plain-English definitions for the terms that come up when buying, selling, or investing in Northern Virginia real estate.
ADR (Average Daily Rate)
ADR is the average nightly revenue a short-term rental earns per booked night. It's calculated as total lodging revenue divided by the number of booked nights. ADR helps estimate gross revenue potential for an Airbnb property.
Airbnb investingRevPAR (Revenue Per Available Room)
RevPAR measures a short-term rental's revenue performance across all available nights, booked or not. It's total revenue divided by total available nights, combining ADR and occupancy into one metric.
Airbnb investingOccupancy rate
Occupancy rate is the percentage of available nights a property is booked. If a property is available 30 nights and booked 21, occupancy is 70%. Realistic year-round occupancy matters more than peak-month numbers.
Airbnb investingNOI (Net Operating Income)
NOI is a property's gross rental income minus operating expenses (taxes, insurance, maintenance, management, vacancies) — but before debt service. NOI is the basis for cap rate and most investment analysis.
Investment propertiesCap rate
Cap rate (capitalization rate) is NOI divided by property value or purchase price, expressed as a percentage. It's a quick way to compare rental returns across properties without factoring in financing.
Investment calculatorCash-on-cash return
Cash-on-cash return is annual pre-tax cash flow divided by the total cash invested (down payment plus closing costs and rehab). It shows the yield on the money you actually put in.
Investment calculatorDSCR (Debt Service Coverage Ratio)
DSCR is NOI divided by annual debt service. Lenders use it on investment loans (DSCR loans) to confirm the property's income covers its payments — typically 1.2 or higher is preferred.
Investment propertiesARV (After Repair Value)
ARV is a property's estimated value after renovations are complete. It's central to fix-and-flip and BRRRR analysis — the rehab must raise value enough to support a profitable resale or refinance.
Fix & flipBRRRR
BRRRR stands for Buy, Rehab, Rent, Refinance, Repeat — a strategy for building a rental portfolio by recycling capital out of each deal through a cash-out refinance after renovation and stabilization.
BRRRR investingLTV (Loan-to-Value)
LTV is the loan amount divided by the property's appraised value, expressed as a percentage. Lenders cap LTV to limit risk; lower LTV means more equity and usually better loan terms.
Appraisal
An appraisal is an independent professional estimate of a property's market value, required by most lenders before financing. Appraised value affects loan size and can trigger appraisal-gap negotiations.
Buy a homeEarnest money deposit
Earnest money is a good-faith deposit submitted with an offer to show serious intent. It's typically held in escrow and credited toward the buyer's closing costs or down payment at settlement.
Buy a homeSeller subsidy (closing cost credit)
A seller subsidy is a credit from the seller toward the buyer's closing costs, negotiated as part of the contract. It helps buyers reduce cash needed at closing and is common in NOVA transactions.
Buy a homeContingency
A contingency is a contract condition that must be met for the deal to proceed — such as inspection, appraisal, or financing contingencies. They protect buyers but can weaken offers in competitive markets.
Buy a homeWant help running the numbers?
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Educational information only — not legal, tax, lending, or financial advice.