1% Rule
A back-of-envelope screen where monthly rent equals 1% of purchase price.
A starting filter, not a verdict. Useful in 2010 markets, much harder to clear in most U.S. metros today. 3Y treats it as one signal among many, not a gate.
Platform · Reference
Glossary
Every term that appears in a 3Y report, defined once and consistently. Search, jump by letter, or scroll.
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3Y Estimate™
3Y's calculated price for a specific property and goal — the goal-convergent price applied to that property.
A market estimate answers "what will others pay?" The 3Y Estimate answers "what should you pay to hit your target?" It is the maximum you can pay while still meeting your yield, cash flow, or DSCR target.
See also: Market Estimate
3Y Score™
Composite score combining a property's cashflow score and location score into a single decision-grade number.
The weighting between cashflow and location can be adjusted by user preference. A high 3Y Score means the deal converges on goal-aligned economics in a strong location.
See also: Location Score
A
ACS
American Community Survey. The Census Bureau's rolling demographic dataset.
Covers income, rent, household composition, education, and more. Published annually at multiple geographic resolutions, from nation down to block group.
B
Block Group
A Census subdivision below the tract, typically 600–3,000 people.
The smallest geography for which most ACS variables are published. Useful when tracts are too coarse for neighborhood-level analysis.
See also: Census Tract
BLS
Bureau of Labor Statistics. Federal source for wages, employment, and inflation series.
3Y uses BLS data for local wage growth and CPI in long-horizon projections.
C
Cap Rate
Net operating income divided by purchase price.
A market-normalized yield used to compare income properties. Falls when prices rise faster than rents — which is most of the last decade.
See also: NOI, Operating Cap Rate
Capital
Total cash committed at acquisition — down payment, closing costs, and make-ready combined.
Sometimes called equity-in. The denominator that should drive return calculations, not just price.
See also: Total Investment, Closing Costs
Cash Velocity
How quickly invested capital recycles into available cash.
Shorter cash velocity means money returns faster and can be redeployed into the next deal. A lever for portfolio scaling, not just single-property returns.
Census Tract
A subdivision of a county, typically 1,200–8,000 people, designed to be relatively homogeneous in population and economic conditions.
The standard geographic unit for ACS data and for 3Y location scoring. Tracts are statistical constructs, not administrative or community boundaries, and are kept stable across decennial Census cycles to support comparison over time.
See also: Neighborhood, Local Area
Closing Costs
One-time fees paid at acquisition — title, escrow, recording, lender, transfer taxes, prorations.
Typically 2–5% of price. Often underestimated by new investors and rolled into total investment when computing yield.
D
DSCR
Debt Service Coverage Ratio. Net operating income divided by annual debt service.
Lenders typically require 1.20+ for investment loans. Below 1.0 means the property doesn't cover its own debt payments without outside cash.
F
FEMA Flood Zone
Federal hazard designation for flood risk.
Properties in Special Flood Hazard Areas (zones starting with A or V) usually require flood insurance, which can add hundreds to thousands per year and meaningfully shift cap-rate math.
FHFA HPI
Federal Housing Finance Agency House Price Index.
Tracks single-family price changes from repeat-sale transactions. 3Y uses HPI for historical price growth at metro and state level.
G
Goal-Convergent Price
The maximum price you can pay while still meeting a stated investment goal — yield, cash flow, or DSCR target.
The inverse of a market estimate. Most tools work forward: input price, output yield. 3Y solves backward: input goal, output the price that satisfies it. When applied to a specific property, the goal-convergent price is reported as the 3Y Estimate.
GRM
Gross Rent Multiplier. Price divided by annual gross rent.
A pre-expense screening ratio. Useful for fast comparison. Weak as a final metric because it ignores taxes, insurance, vacancy, and management.
H
Home Price Growth
Year-over-year change in home values for a geography.
Sourced from FHFA HPI repeat-sale data where available, with median-price fallbacks at finer resolutions.
L
Local Area
The area around a property used to compute local benchmarks — about 4 census tracts and 15,000 residents.
A property in a dense metro may resolve to a Local Area under a mile; a property in rural geography may resolve up to 10 miles. In either case the Local Area is sized to cover about 4 census tracts and 15,000 residents, so estimates stay comparable across geographies. The resolved radius is shown alongside the data — e.g. "Local area (2.7 mi)".
See also: Census Tract
Location Score
3Y's geography-level score reflecting demographics, economics, and risk in the property's tract.
Independent of the property itself. A great property in a weak tract and a weak property in a strong tract score differently — and the 3Y Score weights both.
M
Make-ready
Capital spent post-close to make a property rentable — repairs, paint, appliances, code items.
Distinct from value-add renovation, which targets higher rents. Make-ready is the cost of getting to baseline.
Market Estimate
A market-derived price — what other buyers would pay based on comps and recent sales.
Useful as context, not as a target. The market doesn't know your goal.
See also: Goal-Convergent Price
Median Household Income
ACS-published midpoint of household incomes in a geography.
Used to derive rent affordability via the rent-to-income ratio.
N
Neighborhood
Concentric 1-, 3-, and 5-mile rings around the property.
Used in 3Y reports to show how population, households, and rental demand change with distance from the property. Distinct from Local Area, which is a single adaptive radius rather than fixed rings.
See also: Local Area
NOI
Net Operating Income. Gross rent minus operating expenses, before debt service.
The baseline of property economics. Cap rate, DSCR, and most yield metrics start here.
O
Operating Cap Rate
NOI divided by total invested capital — price plus closing plus make-ready — not just price.
A truer yield once acquisition costs are in. The textbook cap rate flatters deals with heavy closing or rehab.
OpEx Ratio
Operating expenses divided by gross income.
35–50% is typical for residential rentals. Higher signals inefficiency, older buildings, or hidden costs (heavy turnover, deferred maintenance).
P
Population Growth
Five-year change in population for a geography, sourced from ACS.
A demand-side input to long-run rent and price projections. Negative growth is a structural headwind even where current cap rates look attractive.
Poverty Rate
Share of households below the federal poverty line in a geography.
Used in location scoring as a structural risk indicator, not as a stigmatizing label.
R
Rent Growth
Year-over-year change in median rent.
Sourced from ACS gross-rent series and HUD Fair Market Rent. Local rent growth is a stronger predictor of forward returns than national averages.
Rent-to-Income Ratio
Median rent divided by median household income.
The 30% threshold is the conventional affordability ceiling. Markets above 35% have less room for further rent growth without rising delinquency.
Replacement Cost
Estimated cost to rebuild the structure today.
Used by insurance and as a sanity floor on price. When market price is well below replacement cost, new supply is unlikely.
S
Stock Market Comparison
A simplified broad-market buy-and-hold benchmark used to give 3Y return projections familiar context.
In 3Y reports, the stock market comparison is not a guarantee, investment recommendation, or prediction of future market performance. It is a plain-language benchmark based on the common long-term investing idea that broad U.S. equity returns have historically been near the high single digits to low double digits, which can roughly double money over an 8–10 year window.
The shorthand behind this is the Rule of 72: divide 72 by an assumed annual return to estimate how many years it may take money to double. For example, Hartford Funds shows U.S. equities, represented by the S&P 500 Index, at an 8.83% historical return and an estimated 8 years to double.
Source: Hartford Funds: Rule of 72 and U.S. equities doubling time
T
Total Investment
Purchase price plus closing costs plus make-ready.
The number that should drive yield calculations, not price alone.
V
Vacancy
Share of available rental units empty at a point in time.
A demand-side and management indicator. Distinct from vacant ratio, which is broader.
See also: Vacant Ratio
Vacant Ratio
Census-published share of housing units classified vacant.
Includes seasonal, transitional, and long-term vacant — a different measure than rental vacancy. High vacant ratios in non-resort markets often signal demand weakness.
W
Wind-Pool County
Coastal county where standard property insurance excludes wind/hurricane and a state pool provides last-resort coverage.
Premiums there are structurally higher and shift the expense math even on otherwise-attractive properties.
Z
ZIP Code
USPS delivery boundary.
Convenient but not a true geographic unit — ZIPs ignore Census or political boundaries and shift over time. Tracts are the better atom for analytical work.
Source: U.S. Census Bureau (ACS), U.S. Bureau of Labor Statistics, Federal Housing Finance Agency (HPI), U.S. Department of Housing and Urban Development (FMR), FEMA. 3Y-specific terms apply to the 3Y platform and reports.