Investors Guide to Financial Literacy

At its core, financial literacy is the ability to understand and effectively use financial skills like budgeting, investing, and managing debt. Think of it as your financial compass. It helps you navigate through decisions with confidence instead of guesswork.

In the real estate world, financial literacy goes beyond balancing your checkbook or knowing how to apply for a mortgage. It means understanding key terms and how they all play into your investment’s profitability.

Real estate investing isn’t just about finding the right property. It’s about knowing what that property is worth now, what it could be worth later, and how to get from point A to point Z in the most profitable way.

 Your Go-To Real Estate Investor & Contractor Cheat Sheet

Ready to level up? Here’s a quick-reference glossary of common terms used by investors, lenders, and contractors:

CEG’s Key Investor Terms

• AIV (As-Is Value): The current market value of a property in its present, unimproved condition, before any repairs or renovations. Often used by lenders to assess baseline collateral value.
• ARV (After Repair Value): The projected value of a property after all planned renovations or improvements are completed. Essential for estimating potential profit and calculating financing terms like LTV or LTC.
• Closing Costs: Fees and expenses paid at the end of a real estate transaction, including title insurance, escrow fees, taxes, attorney fees, and lender charges. Typically 2–5% of the purchase price.
• LTC (Loan-to-Cost): A ratio that compares the loan amount to the total project cost (purchase + rehab). Often used in fix-and-flip or construction loans to evaluate risk.
• Scope of Work: A detailed breakdown of all the work to be performed on a renovation or construction project. Includes labor, materials, timeline, and often required for underwriting and contractor agreements.

Real Growth Starts with Real Knowledge. No matter where you are in your real estate journey, an understanding of financial principles is the foundation for everything else. If a term confuses you, ask. If a deal feels off, run the numbers again. The more you practice financial literacy, the more second-nature it becomes.

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