Lineage handles acquisition, lending, insurance, and property management. You build the portfolio. We handle everything else.
This glossary exists so you can speak the language. You don't need to memorize it — that's what we're here for.
The numbers you’ll see on every pro forma and property listing.
The money left after a rental property pays every bill. Not the rent. The actual cash that hits your bank account after mortgage, taxes, insurance, property management, maintenance reserves, and vacancy allowance. A realistic range for Lineage properties is $200–$500/month per property after all expenses.
Your annual cash flow divided by total cash invested. If you put $50K into a property and it generates $3,600 in annual cash flow, your cash-on-cash return is 7.2%. This is the return that matters most for comparing properties — it measures what your actual dollars are earning.
Annual net operating income divided by purchase price. It tells you what the property earns before financing. A 7% cap rate means the property generates 7 cents of net income for every dollar of purchase price. Cap rate ignores your mortgage — it’s a property-level metric, not an investor-level metric. Lineage markets typically range from 6–8%.
Annual rent divided by purchase price. A quick way to compare properties before running detailed numbers. A $200K property renting for $1,500/month ($18K/year) has a gross yield of 9%. This doesn’t account for expenses — it’s a screening metric, not a decision metric.
Rental income minus operating expenses, before mortgage payments. Includes taxes, insurance, management, maintenance, and vacancy. On a property renting for $18K/year with $8K in operating expenses, NOI is $10K. This is the number used to calculate cap rate.
A projection of a property’s financial performance. Expected rent, expenses, cash flow, and returns. Lineage provides one for every property in the marketplace. Pro formas are estimates based on conservative assumptions — we underwrite with realistic vacancy, full management fees, and maintenance reserves.
How you pay for a rental property — and why 85% of Lineage investors don’t use conventional loans.
The ratio of a property’s rental income to its mortgage payment. A DSCR of 1.2 means the property generates 20% more rent than the mortgage costs. DSCR loans qualify based on the property’s income, not yours — your W-2, tax returns, and other debts don’t factor in. Lineage’s lending partner typically requires a minimum DSCR of 1.0–1.25.
A mortgage that qualifies based on the property’s rental income, not yours. Rates run 0.25–0.75% higher than conventional loans. The trade-off: no income verification, no DTI calculation, and you can close in an LLC. For W-2 professionals who already have a conventional mortgage on their primary residence, DSCR is often the cleaner path.
The loan amount divided by the property value. If you put 25% down on a $200K property, your loan is $150K and your LTV is 75%. Most DSCR lenders require 75–80% LTV for investment properties. Lower LTV = more equity = better rates.
Your total monthly debt payments divided by your gross monthly income. Conventional lenders use DTI to determine how much you can borrow. Most cap investment property DTI at 45–50%. DSCR loans bypass DTI entirely — which is why most Lineage investors use them.
Your total mortgage payment — principal plus interest. When lenders evaluate a rental property, they compare the rent to the debt service to determine if the property can support the loan.
The schedule that determines how much of each payment goes to interest vs. principal. Early in the loan, most of your payment is interest. Over time, the split shifts and more goes to principal. On a 30-year loan at 7%, you’re paying roughly 88% interest in year one. By year 15, it’s closer to 77%. The amortization schedule determines how fast you build equity.
A revolving credit line secured by equity in a property you own. Usually your primary residence. Common way investors fund down payments on rental properties. Draw what you need, pay interest only on what you use.
The four returns of rental property investing — and the tax code that makes them work.
The increase in your property’s market value over time. In Lineage markets, this has historically run 4–6% annually. The key insight for leveraged investors: appreciation applies to the full property value, not just your down payment. A 5% gain on a $200K property is $10K — but if you only put $40K down, that’s a 25% return on your cash from appreciation alone.
The portion of each mortgage payment that reduces your loan balance. Your tenant pays the full mortgage, but part of each payment builds your equity. On a $160K loan at 7%, about $1,572 goes to principal in year one. By year 10, it’s $2,343/year. Over 10 years, your tenant has paid down $18K–$20K of your debt. It’s a return most investors forget to count.
The difference between what your property is worth and what you owe. Equity grows three ways: appreciation (market value increases), principal paydown (your tenant’s rent reduces the loan), and forced equity (renovations that increase value).
A non-cash tax deduction the IRS gives you for owning a rental property. Residential rentals are depreciated over 27.5 years. On a $200K property with $170K in building value, that’s a $6,182 annual deduction — money you deduct from your taxable income without writing a check. The property is probably appreciating in real life while you claim it’s losing value on paper. That’s the arbitrage.
A tax strategy that accelerates depreciation into the first few years of ownership. An engineer identifies components of your property (appliances, flooring, fixtures, landscaping) that can be depreciated faster than 27.5 years. On a $200K property, cost segregation can generate $15K–$22K in first-year deductions vs. $6K with standard depreciation. The study costs $3K–$5K. Worth it for high-income investors.
Sell one investment property and buy another without paying capital gains tax. You have 45 days to identify a replacement property and 180 days to close. The gain rolls into the new property’s cost basis — you can defer taxes indefinitely by continuing to exchange. Most investors use this to trade up from a single property into a larger one.
What you’re buying and what it costs to own it.
What a property is worth after renovations are complete. If you buy for $140K and put $20K into repairs, and the ARV is $185K, you’ve created $25K in equity through the rehab. Lineage properties are typically delivered at or near ARV — you’re not buying a project.
The fees paid when a real estate transaction closes. Includes lender fees, title insurance, appraisal, inspection, recording fees, and prepaid taxes/insurance. On a $200K property, expect $4,000–$8,000 depending on the state and loan type.
Cash set aside for unexpected expenses and vacancy. Your lender will typically require 6 months of fixed expenses at closing. Beyond that, maintain roughly $200/month per property for maintenance. The property manager also holds a $500 repair reserve. Reserves aren’t a cost — they’re insurance against surprises turning into crises.
The percentage of time a property sits empty between tenants. Lineage pro formas budget 7% vacancy (roughly 3–4 weeks per year). Good tenant screening and market-rate pricing keep vacancy low. Every vacant month costs you a full mortgage payment with zero income.
The people who make out-of-state investing work.
The percentage of rent paid to a professional property manager. Industry standard is 8–10% of collected rent. On a $1,500/month rental, that’s $120–$150/month. The PM handles tenant screening, lease enforcement, maintenance coordination, and rent collection. For out-of-state investors, this isn’t optional — it’s infrastructure.
The process of evaluating rental applicants before signing a lease. Lineage’s property managers screen for 3x income-to-rent ratio, credit history, criminal background, and prior rental history. Some do in-home visits. The result: less than 5% eviction rate across the portfolio. This is the single biggest factor in whether your cash flow projections hold up.