If you want to be a landlord or a real estate investor, you don’t need fancy finance jargon. You need terms that matter, explained like a normal person. Here’s a straightforward, no-BS glossary of the terms you’ll actually use.
These terms are the ones you’ll actually use in real rental management and real estate investing, not theory.
Everyday Landlord Terms
Tenant
Person living in your property in exchange for rent.
Landlord
Owner or manager of a rental property. Your job is to protect the property, not solve personal problems.
Lease
Written contract that spells out the rules, rent amount, due dates, and consequences. If it isn’t written, it doesn’t count.
Rent
The monthly amount owed. It is an important scheduled bill, not a suggestion.
Security Deposit
Money held for damage or unpaid rent.
Late Fee
Charge when rent is not paid on time. Used to prevent repeat behavior, not to make profit.
Grace Period
Extra days before a late fee applies. Optional in some states.
Lease and Legal Terms
Fixed Term Lease
A lease with a set end date (example: 12 months). Predictable for both sides.
Month-to-Month Lease (MTM)
Renews monthly. Easy to raise rent or end the agreement.
Eviction
Legal removal of a tenant who does not pay or violates the lease. It is business, not personal.
Notice to Vacate
Written notice telling a tenant to leave by a certain date. Usually required before filing for eviction.
Fair Housing Laws
Laws preventing discrimination. Screen based on qualifications and behavior, not personal characteristics.
Abandonment
When a tenant disappears and leaves belongings behind. Follow your state’s legal process before removing anything. Very important.
Property Management Terms
Turnover
Time between tenants when you clean, repair, and prepare the property. Vacancy costs money.
Make-Ready
The cleanup and repairs required before the next tenant moves in.
Pre-Screening
Filtering applicants before showings to avoid wasting time on unqualified renters.
Move-In Inspection
Documenting the property’s condition before the tenant receives keys. Use an app that has a time-stamp.
Rent-to-Income Ratio
A tenant’s income must be high enough to afford rent. Common standard: income of 3x the rent. I personally use 3.5x the rent.
Wear and Tear
Normal, unavoidable aging and use of a property. Not chargeable to a tenant from a security deposit.
Damage
Harm caused by the tenant, guests, or pets. Charge that security deposit!
Real Estate Investor Terms You Will Hear A Lot
Cash Flow
Money left over after paying all expenses. If it is negative, you are paying for someone else to live there. Don’t do that.
Cap Rate
Annual profit divided by purchase price. Helps compare deals, don’t obsess over decimals.
ROI (Return on Investment)
Your profit compared to your original investment. Basic measurement of performance.
CoC (Cash-on-Cash Return)
ROI focused only on your out-of-pocket cash. Shows how efficiently your cash is working.
NOI (Net Operating Income)
Income minus operating expenses (not including mortgage). Used to value rentals and small multifamily properties.
DSCR (Debt Service Coverage Ratio)
Measures whether a property’s income can cover its debt. Many lenders want DSCR of 1.20 or higher.
ARV (After Repair Value)
Property value after repairs or renovations. Often used in flips or BRRRR projects. Often exaggerated by people trying to sell you a distressed house. 😉
BRRRR
Buy, Rehab, Rent, Refinance, Repeat. A strategy that works with discipline and fails with emotion or bad math.
Appreciation
Value increasing over time. It is a bonus, not a strategy. Never count on it.
Expense Terms You Should Always Budget For
PITI
Principal, interest, taxes, and insurance. The core of a mortgage payment.
CapEx (Capital Expenditures)
Large, long-term replacement items: roofs, furnaces, water heaters, major exterior work.
Maintenance
Routine repairs and upkeep. Small problems become large ones when ignored.
Vacancy Rate
The expected amount of time a property will not have a tenant. Always budget for vacancy.
Reserves
Money you set aside in advance for repairs and big expenses. Good landlords save before something breaks.
Screening and Application Terms
Background Check
Checks identity and criminal history. Do not skip this step.
Credit Report
Shows financial responsibility patterns. You’re looking for habits, not perfection. I use a credit score of 625+.
Co-Signer or Guarantor
Someone who guarantees payment if the tenant does not pay. Must be financially stronger than the tenant. I recommend an income of at least 7x the rent for a co-signer – after all, they have to be able to pay their bills AND your tenants!
Proof of Income
Valid documentation of earnings: paystubs, offer letters, award letters, business statements. Not screenshots from payment apps.
Verification
Contacting employers and previous landlords to confirm information. Trust nothing unverified.
Want to see how I actually screen tenants in real life? Read this: How I Pre-Screen Tenants Before a Showing
Final Thoughts
- Screening protects your sanity.
- Numbers protect your wallet.
- The lease protects your property.
- Documentation protects you in court.
Remember, be professional, not emotional.
This is a business, so run it like one.
Disclosure: This post contains Amazon affiliate links. If you purchase through them, I may earn a small commission at no extra cost to you.
