The amount of money left for the investor after all obligations of a real estate transaction, including personal income taxes on the transaction.
The Average Rate of Return (ARR) is a metric used to evaluate the profitability of an investment, calculated by dividing the total net earnings by the number of years the investment was held, and then dividing by the initial acquisition cost.
A basis point (bps) represents one hundredth of one percent or 0.01%, and it is commonly used in the financial and real estate sectors to denote changes in interest rates and other percentages.
An escalator clause is a provision in a lease that requires the tenant to pay additional rent based on an increase in specified costs such as real estate taxes, operating expenses, or other financial metrics.
A financial metric that adjusts the Internal Rate of Return (IRR) by considering practical aspects such as the cost of funds and returns from interim investments.
Holding costs, also known as carrying costs, are the expenses incurred by owning and maintaining a property over a period of time until it is sold or put to productive use.
Internal Rate of Return (IRR) is a crucial financial metric used to evaluate the attractiveness of an investment by calculating the annualized rate of return earned over the investment's lifespan, taking into account the effect of compound interest.
The Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments or compare the expected profitability of different investments. It is the discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis.
A kicker is a payment required by a mortgage, in addition to normal principal and interest, often linked to a borrower’s financial performance metrics such as gross sales or profits.
The Loan Coverage Ratio (LCR), also known as the Debt Coverage Ratio (DCR), is a key financial metric used to assess a property's ability to generate enough income to cover its debt obligations. It is widely used by lenders to evaluate the financial health and viability of real estate investments.
The Loan-to-Value (LTV) ratio is a critical financial metric in real estate and lending that compares the loan amount to the appraised value of the property, influencing mortgage terms, interest rates, and approval processes.
Net Present Value (NPV) is a crucial financial metric used to evaluate the profitability of an investment. By assessing the present value of expected future cash flows, NPV helps investors and businesses make informed decisions.
Net Yield refers to the return on an investment after subtracting all expenses associated with the investment.
The Operating Expense Ratio (OER) is a key metric used in real estate to measure the efficiency of a property's management by comparing its operating expenses to its potential gross income. A lower OER indicates a more efficiently managed property.
The Rate of Return on Investment (ROI) measures the profitability of an investment, determining the efficiency of various investment choices.
Return on Investment (ROI) measures the gain or loss generated on an investment relative to the amount of money invested. ROI is often expressed as a percentage and is commonly used to evaluate the efficiency or profitability of an investment.
The risk-free rate is the interest rate on the safest investments, typically represented by short-term government securities like U.S. Treasury bills. It is a crucial component in finance for calculating other metrics and making investment decisions.
Yield refers to the earnings generated and realized on an investment over a particular period of time, presented as a percentage of the investment's cost, current market value, or face value.
