© 2025 Groundfloor. All rights reserved.
| Terms | Definitions |
|---|---|
| 1% Rule | The monthly rent should be equal to or more than 1% of the property’s purchase price for the investment to be profitable. |
| 1031 Exchange | A tax break referring to Section 1031 of the US Internal Revenue Code (IRC). It allows investors to exchange one property for a similar one while deferring capital gains tax on the sale. |
| 2% Rule | An investment property should generate a monthly rent of no less than 2% of the purchase price for it to be profitable. |
| Absorption Rate | How quickly homes are sold in the real estate market. This evaluates supply and demand with above 20% indicating a seller’s market and below 15% indicating a buyer’s market. |
| Accessory Dwelling Unit | A secondary and smaller living unit located on the same lot as a primary and larger stand-alone home. It can be attached (or not) to the primary building) for example a basement apartment or guest house. |
| Accredited Investor | A person or legal entity that can invest and trade in private securities that are not registered with financial authorities. Requirements include a minimum net worth usually $1 million and a minimum annual income usually $200k. |
| Accredited Investor | An investor who meets certain income or net worth thresholds set by the Securities and Exchange Commission (SEC). Accreditation allows investors to participate in certain investment offerings that are not available to the general public such as private placements and some real estate crowdfunding opportunities. |
| Accrued Interest | The amount of interest that has been incurred as of a specific date but has not yet been paid out. |
| Acquisition Cost | The total cost of purchasing real estate property including mortgage loan fees / closing costs / commissions / inspections / fees and more. |
| Active Listing | A real estate property currently available and listed for sale. |
| Total Loans | The number of loans you have invested. |
| Actual Rate | The observed market interest rate adjusted for the effects of inflation. |
| Ad Valorem Tax | Tax proportional to the property's assessed value. |
| Adjustable Rate Mortgage (ARM) | A type of mortgage loan where the interest rate on the balance or the mortgage note changes over a period of time with a benchmark on which interest rate changes usually periodically. |
| Affordable Housing | Typically defined by the federal government as housing that consumes no more than 30% of a household’s income. |
| After Repair Value (ARV) | The estimated market value of a property after upgrades / repairs and renovations most commonly used in flipping houses. |
| Agreement of Sale | A legally binding document terms of agreement signed by the property seller and property buyer. |
| Alternative Investment | An investment option outside of traditional stocks / bonds and mutual funds. Alternative investments can offer diversification and potentially higher returns but they also tend to be less liquid and carry more risk. (Note: This is a broad term and specific alternative investments offered by Fintech platforms may have their own definitions within this glossary) |
| Amortization | The amount of principal and interest paid each month over loan length. The amount is the same each month with a smaller amount going toward the principal and larger amount going toward interest. |
| Amount Invested (IWA) | Current open investments. |
| Annual Depreciation Allowance | The amount an investor is allowed to deduct or write off in taxes every year based on the depreciation of the property. |
| Annual Percentage Rate (APR) | Cost of credit expressed as a yearly interest rate. Compares costs of different loans like mortgages or other real estate loans. |
| Annualized Return (ARR) | A metric used to express a rate of return on an investment over a one-year period assuming all earnings are reinvested (compounded). ARR is a helpful tool for comparing the performance of different investments across different timeframes. |
| Anticipated Hold Period | How long an investor anticipates holding each property until they liquidate. Financing terms are matched during this time to optimize returns. |
| Appraisal | The process of determining a property’s value required by a lender to ensure the borrowed money is a fair amount for the property. |
| Αppraised Value | Value of a property to determine how much money can be borrowed for a property’s value and under what terms. |
| Appreciation | The estimated increase in value of an asset over a certain timeframe. |
| Asset Management | Growing your wealth and portfolio over time by acquiring / maintaining and trading investments that can grow in value. |
| Asset Management Blog | A monthly series highlighting key performance metrics and other relevant data managed by Groundfloor's Asset Management team. |
| Assumable Mortgage | Allows a buyer to purchase a property by taking over the seller’s mortgage loan. |
| Auto Invest | The process in which transferred funds are instantly and automatically invested as soon as they reach your account. |
| Auto Invest Account | Groundfloor's third-generation platform that automatically invests funds as soon as they reach your account. Then those funds are reinvested upon repayment. |
| Available Balance / Available Funds | The balance available in your account for immediate use. |
| Bank-Owned Property | A property owned by the bank that’s reverted back to the lender after it fails to sell at a foreclosure auction. This happens when a borrower has defaulted on mortgage payments. |
| Blended Contract Rate (LRO allocation) | Is this different than the one below? Otherwise I have no idea. |
| Blended Rate (Notes repayment) | The interest rate charged on a loan that represents the combination of a previous rate and a new rate. |
| Borrowers | Real estate entrepreneurs who borrow fix-and-flip or new construction loans from Groundfloor. |
| Broker Price Opinion (BPO) | The estimated property value determined by a real estate broker or qualified individual or firm. |
| BRRR Method | Stans for buying / rehabbing / renting / refinancing and repeating. A method to help investors build a portfolio of properties over a short timeframe without having a lot of initial cash. |
© 2025 Groundfloor. All rights reserved.