Module 4 — Deal Terminology

Topic 4.1: Purchase Price, Down Payment, and Loan Amount

These are the building blocks of any deal.

• Purchase Price: The agreed-upon price you pay for the property. (e.g., $180,000)
• Down Payment: The portion of the purchase price you pay with your own cash. For investment properties, this is typically 20-25%. (e.g., 25% of $180,000 = $45,000)
• Loan Amount: The amount you borrow from the bank. (e.g., $180,000 - $45,000 = $135,000)

Topic 4.2: Gross Rent, Vacancy, and Operating Expenses

• Gross Rent: The total amount of rent collected if the property is occupied 100% of the time. (e.g., $1,650/month)
• Vacancy: The reality that a property will not be occupied 100% of the time. There will be periods between tenants. We budget for this as a percentage of gross rent (typically 5-8%). If you budget