Real Estate Terminology

What is the difference between market rent and HUD fair market rent?

Market rents and HUD Fair Market Rents (FMRs) are both measures used to understand rental prices, but they serve different purposes and are calculated differently.

How to do Sources and Uses for Real Estate

Creating a "Sources and Uses" statement is an essential part of real estate financial analysis, particularly for development projects or large acquisitions. Here's a step-by-step guide on how to create one.

What is an operating expense ratio in multifamily?

The Operating Expense Ratio (OER) in multifamily real estate is a financial metric used to understand the efficiency of a property’s operation. It is calculated by dividing the total operating expenses of a property by its gross operating income.

What does eff year built mean?

"Eff Year Built" on a tax statement stands for "Effective Year Built." It's a term used in property assessment and taxation to represent an estimate of when a building's current condition reflects a similar state to that of a new building.

Cap Rate vs IRR in Commercial Real Estate

In commercial real estate, both the capitalization rate (cap rate) and the internal rate of return (IRR) are key metrics used to evaluate the potential profitability and investment performance of a property, but they measure different aspects and are used in different contexts.

What is a T-12 in commercial real estate?

In commercial real estate, a "T-12" refers to a Trailing Twelve Months financial statement. It's a document that provides a comprehensive overview of a property's financial performance over the past twelve months.

What is an offering memorandum in commercial real estate?

An Offering Memorandum (OM) in commercial real estate is a comprehensive document used to present a commercial property to potential buyers or investors.

What is a rent concession?

A rent concession, is an incentive offered by landlords or property managers to prospective or current tenants, typically as a means to attract new tenants, retain existing ones, or fill vacancies in a competitive market.

What is a rent roll?

A rent roll is a comprehensive document or spreadsheet used by landlords, property managers, and real estate investors to compile all the key details about the rental units they manage or own.

What Is ClickPay and How Is It Used?

ClickPay is a cloud-based payment platform that enhances the efficiency of rent collection in the multifamily industry. By offering a range of payment options such as credit/debit cards, ACH, and bank transfers, it caters to the evolving demands of property managers and residents.

What are the most common multifamily property management jobs?

The multifamily property management sector involves a range of job roles, each crucial for the efficient management and operation of apartment complexes and similar properties.

What is a multifamily rent comparable and how do you identify them?

A rent comparable, often referred to as a "rent comp," is an important concept in real estate, particularly in property management and investment. It refers to a property similar to the subject property in terms of various characteristics, used as a benchmark to determine the market rent for the subject property.

How to create a net effective rent calculator in excel

Creating a Net Effective Rent (NER) calculator in Excel involves setting up a formula to calculate the net effective rent based on the total cost of the lease over its term, including any rent-free periods or concessions. Here's a basic guide to set up such a calculator.

What is market rent?

Market rent refers to the amount a willing tenant would pay and a willing landlord would accept for a rental property under current market conditions. This term is commonly used in real estate to indicate the going rate for rental properties in a specific area.

Is depreciation an operating expense?

Depreciation is not typically classified as an operating expense in financial reporting. Instead, it's a non-cash expense that reflects the gradual reduction in value of a company's tangible assets over time.

What is Fair Market Rent?

Fair Market Rent (FMR) is a term used, particularly in the United States, to describe a rent estimate that is determined to be fair and reasonable for a specific area. It's often used in housing assistance programs, such as the Section 8 Housing Choice Voucher program administered by the U.S. Department of Housing and Urban Development (HUD).

What are the drawbacks of multifamily revenue management?

Multifamily revenue management is a system used by property managers and owners to optimize rental income by setting rental rates based on various factors like market demand, seasonality, unit type, and historical data. While many in the multifamily industry find value in these systems, critics argue that there are several drawbacks.

How can I do a net effective rent calculation in excel?

To calculate the Net Effective Rent (NER) in Excel, you will typically follow a formula that takes into account the total cost of the lease over its term, including any concessions like free months of rent, and then divides that by the total term of the lease to get the average monthly cost.

What is due diligence automation in real estate?

Due diligence automation in real estate involves the use of advanced technologies such as Artificial Intelligence (AI), machine learning, and legal AI to streamline the due diligence process typically undertaken before real estate transactions.

What are the best sources of real estate news?

For staying updated with real estate news, several sources are highlighted by different platforms as being among the best.

How Do I Budget for Operating Expenses on a Multifamily Proforma?

Creating a budget for operating expenses on a multifamily proforma involves a detailed analysis of both current and projected costs associated with the property. Here's a step-by-step guide to help you budget for operating expenses.

How to Find Rent Comps

Finding rent comparables, or "rent comps," is an important step in determining the appropriate rental price for a property. Rent comps are similar rental properties in terms of location, size, condition, and amenities that have recently been leased.

What is a market analysis in real estate?

A market analysis in real estate, often referred to as a Comparative Market Analysis (CMA), is a study designed to determine the estimated value of a property, based on the current market conditions.

What is a multifamily rent survey?

A multifamily rent survey is a study or analysis conducted to gather, compare, and evaluate rental rates of multifamily properties (e.g., apartment complexes) within a specific market or area. The goal of this survey is to understand current market rents, occupancy rates, and any offered amenities or concessions. This information helps property owners, managers, and investors make informed decisions about pricing their rental units and identifying potential investment opportunities or areas of improvement.

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