General Industry Real Estate Lingo

If you are new to Real Estate and need to brush up on some Real Estate lingo, keep reading. What are some common real estate terms and what do they mean? We are about to break down some commonly used words in the multifamily world, to give you a greater understanding when communicating with brokers and lenders through your real estate journey.

Terms for Apartments: Apartments, Multifamily, Commercial Residential Housing

Different terms for metrics: Per unit, Per door, Per key, Per apartment

Pro Forma: A type of financial statement used in real estate transactions to project the possible financial performance of a property.

NOI and Cap Rates: Two of the most important financial metrics in real estate.

Capitalization Rates (Cap rate): the rate of return on a property based on the net operating income (NOI) that the property generates.

Net Operating Income (NOI): Is your total income minus operating expenses.

Property value: NOI divided by your Cap rate.

Cash on Cash Returns (COC): Cash flow before tax divided by total equity invested

Syndication: A financial structure through which we purchase properties using a pool of capital/ funds from a variety of different sources.

Sponsor/ General Partner (GP)/ Key Principal (KP): 3 interchangeable terms that are used to describe the person that leads the deal

Unit Mix/ Unit breakdown/ Unit structure: The table that breaks down how many units of each type are at a property. It breaks down all the units of the property into a table and condenses them per unit type and size while providing rents or projected rents for each unit type.

Trailing 12 (T12) Financial statement: A month by month breakdown of the past 12 months or performance on a property.

Year End (YE) Financial Statements: Full calendar year of financials from January- December.

Rent Rolls: Breakdown of every unit on a property, displaying every unit line by line with details of each unit including tenant, square footage, rent, lease start and end date, unit number etc.

Debt Service is your mortgage payments

Debt Service Coverage ratio: Is your NOI over your debt service, at what multiple are you covering your debt payments?

Loan Term: The length of the loan and at what point you have to pay back the loan in full.

Amortization: Financial term to describe at what point if you continue paying this loan would you fully pay of the principal balance

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