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NOI – Net Operating Income – gross rental revenue less operating expenses (property taxes, insurance, repairs and maintenance)


Cap Rate – NOI (net operating income) divided by the value of property expressed as percent (i.e. 5%)


OER – Operating Expenses Ratio – divide the total operating expenses by the potential rental income.


GOI – Gross Operating Income – actual annual income an investor can expect to collect from the property after deductions for vacancy and credit loss.


CCR – Cash on Cash Return – or cash yield, measures the annual pre-tax cash flow divided by the initial equity invested.


GRM – Gross Rent Multiplier – divide the property’s price by its potential gross annual income.


GPR – Gross Potential Rent – is the maximum amount of rent money an owner or investor can expect to receive from a property during a specific time period.

CAGR – Compounded Annual Growth Rate – is a measure of growth over multiple time periods. 


XIRR – Extended Internal Rate of Return – is a measure of return used when multiple investments at different points in time are made in a financial instrument.

IRR – Internal Rate of Return – Investors use IRR to measure a project’s profitability. This metric accounts for initial investment costs, cash flow, and property sale proceeds.


NPV – Net Present Value – Net present value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows over a period of time.


ROI – Return on Investment – the return of an investment is divided by the cost of the investment.

Yield on Cost – is the Net Operating Income (NOI) at stabilization divided by the total project cost at stabilization divided by the total project cost.



DSCR – Debt Service Coverage Ratio – calculated by taking the annual NOI and dividing it by the total debt service.

LTV – Loan to Value – the amount of debt financing a lender will provide as a percent of the market value (i.e. 80%)


LTC – Loan to Cost – the amount of debt financing a lender will provide as a percent of the cost of  a development (i.e. 70%)


Amortization Period – the number of months  / years  the principal payment of a loan is spread over.  


Term – The length of time that the interest rate of the mortgage is agreed for (i.e. 30 years)


UPB – Unpaid Principal Balance – is the portion of a loan (e.g. a mortgage loan) at a certain point in time that has not yet been remitted to the lender.


Land Loan – financing to secure a piece of land with no NOI. The LTV will be much lower than an income producing  property (i.e. 50%)


Mezzanine Debt – a hybrid debt issue with an equity component, is one of the highest-risk forms of debt as it is subordinate to pure equity but senior to pure debt.

Lease up –  or stabilization, is the time period for a newly available property to attract tenants and reach stabilized occupancy.


TI – Tenant Improvements – or Leasehold Improvement, are the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant.


Replacement Reserves – are funds set aside that provide for the periodic replacement of building components that wear out more rapidly than the building itself and therefore must be replaced during the building's economic life (short lived items).


Tenant Turnover – is when one tenant of a rental property moves out and the next one moves in, sometimes with time in between.

Stabilized –  The occupancy levels reached by a new property after the initial lease-up period, and that are reasonably expected to continue into the future with the proper marketing, management and maintenance.

GP – General Partner – An owner of a partnership who has unlimited liability and also usually an active manager in the operations who can earn a promote.


TUMMI – Taxes, Utilities, Maintenance, Management and Insurance.


Loss-to-Lease – it represents the lease increase amount at renewal time forfeited by the landlord to renew the terms with current tenant.


Downtime – a charge taken against GPR associated with gaps in income due to non-contiguous apartment lease terms.

RUBS - Ratio utility billing services (RUBS) is a method of allocating any shared utility expenses provided to a property. These expenses are split between all residents benefiting from that utility. Unlike a flat fee, each resident pays a ratio of the utility bill, which varies from month to month according to actual usage at the property. These utility costs are consolidated into a single utility bill for each resident to pay.


Shared Utilities – Most properties share at least some utilities, particularly units with centralized heating and air or centralized water boilers. Properties may share any or all of the following services:

-Trash removal

-Water and sewage

-Heating for shared water boilers

-Central heating and cooling




FSR – Floor Space Ratio – used to define the size of a building and control the density of development on a parcel of land.


GBA – Gross Building Area – the sum of all building spaces typically measured from external wall to external wall.

GLA – Gross Leasable Area – the sum of all enclosed livable space (excluding things like patios, garages, etc.)


Gross Site Area – the two dimensional measurements (sq ft) of a site based on it’s property lines.


Deductions – A portion of gross site area such as public access, roads, corridors, lanes, etc.


Net Site Area – The gross site area less deductions listed above.


Max GBA – The gross building area calculated based on the Floor Space Ratio.


Construction GBA – the gross building area based on construction plans.


Salable area – the gross building area based on construction less all common spaces or other non-salable areas.


Promote – sponsor’s disproportionate share of profits in a real estate deal above a predetermined return threshold.


Waterfall Schedule – is a method of splitting profits among partners in a transaction that allows for profits to follow an uneven distribution.


-Responsible for all management decisions

-Fiduciary duty to act for the benefit of the limited partners

-Fully liable for its actions

-May have guarantees as security on borrowing


-Limited refers to “limited liability”

-Have priority on liquidation, ahead of GPs

-Provide Capital to fund the development project

-Have no control over the management of the fund/project

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