Real Estate Dictionary

What is a HUD BSPRA credit?

The HUD BSPRA (Builder-Seller Profit and Risk Allowance) credit is a financing tool that increases the allowable mortgage amount for multifamily housing projects by acknowledging the risk and effort of developers, enhancing the project's financial feasibility.

January 25, 2024

What is "chunk rent" in real estate?

Chunk rent is a term used to refer to the advertised rent of a multifamily unit, as opposed to the per sqft rent.

January 25, 2024

What is an interest reserve in real estate finance?

An interest reserve is a part of a construction loan that covers interest payments during development, easing the borrower's cash flow burden until the project is income-generating.

January 25, 2024

When Do You Have to Pay Interest During Construction Projects?

Interest on construction loans is usually paid either during the construction phase or upon completion, depending on whether it's interest-only payments, capitalized, or deferred, as per the loan agreement.

January 25, 2024

What is a waterfall model?

The waterfall model is a tiered distribution system where investment returns are allocated first to investor capital and preferred returns, followed by a catch-up phase for the general partner, and finally, split between all partners based on agreed ratios.

January 25, 2024

What are the advantages of an interest only multifamily loan?

Interest-only multifamily loans offer lower initial payments and potential tax benefits, enhancing cash flow for reinvestment and property improvement, but come with the risk of higher future payments and principal repayment.

January 25, 2024

What is Stabilized Occupancy?

Stabilized occupancy is when a rental property, often a multifamily or commercial building, has reached a consistent level of tenant occupancy that is sustainable and expected to continue, indicating a balance between tenant turnover and new leases.

January 24, 2024

What is a rent premium in multifamily?

A rent premium in multifamily real estate is the extra amount tenants pay for properties with desirable features such as prime locations, upgraded amenities, unit renovations, and superior building facilities, reflecting the added value of these enhancements.

January 24, 2024

What is an SREO in Real Estate?

The Schedule of Real Estate Owned (SREO) in real estate is a comprehensive document listing an investor's properties, detailing aspects like purchase price, market value, mortgages, and income, used primarily for loan applications and portfolio assessment.

January 24, 2024

AAR vs IRR in real estate

In real estate, Average Annual Return (AAR) offers a simple yearly return calculation without time value considerations, while Internal Rate of Return (IRR) provides a comprehensive analysis of investment growth by accounting for the time value of money in cash flow projections.

January 24, 2024

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Real Estate Dictionary

What is a HUD BSPRA credit?

What is "chunk rent" in real estate?

What is an interest reserve in real estate finance?

When Do You Have to Pay Interest During Construction Projects?

What is a waterfall model?

What are the advantages of an interest only multifamily loan?

What is Stabilized Occupancy?

What is a rent premium in multifamily?

What is an SREO in Real Estate?

AAR vs IRR in real estate

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