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General Real Estate Terms
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APN:
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Assessor Parcel Number. Tax Identification Number for property
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Lender Terms - Loan Terms - Mortgage Terms
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Annual Cap:
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Maximum amount the interest rate on an adjustable loan can adjust each year after the initial rate adjustment.
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Assumable Loan:
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An existing loan on a property that can be taken over by the new owner.
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Blended Interest Rate:
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The overall interest rate when all the loans are combined
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CLTV:
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Combined Loan to Value. The sum of all the LTVs for all the loans on a property. For example, if the first mortgage is a 70% LTV, and the second is a 10% LTV, then the CLTV is 80% for the property.
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Initial Fixed Period:
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Time period that the interest rate for an adjustable loan is initially fixed for. After this time period, the loan will begin adjusting.
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Initial Rate Cap:
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Maximum amount an interest rate can adjust for an adjustable loan after the initial fixed period.
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Lifetime Cap:
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Maximum amount the interest rate on an adjustable loan can adjust over the lifetime of the loan.
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LTV:
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Loan to Value. The loan amount divided by the value of the property securing the loan.
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Income Property - Commercial Real Estate Terms
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CAM Charges:
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Common Area Maintenance Charges. Additional charges the tenant pays other than rent to the landlord to cover costs related to the property in general, from maintenance and landscaping of common area to property taxes.
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Cap Rate:
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Capitalization Rate. The percent of the price that is returned annually in the net operating income. A good measure of value because income and expenses are considered.
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Credit Loss:
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Actual or projected loss due to tenants not paying rent.
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Depreciable Value:
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Improvements are depreciable. The improvements are anything added to the land. Property tax statements often separate the property value into the value of the land and the value of the improvements. This improvement value and any capital improvements are depreciable. The value of the land is not depreciable.
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Depreciation Term:
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27.5 years for residential income properties and 39 years for other commercial properties
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Debt Service:
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Total of combined monthly or annual payments to loans on a property.
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DCR:
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Debt Coverage Ratio. The ratio of the net operating income relative to the total debt service. A DCR greater than one means the net income will be able to pay for the debt and the property should have a positive cash flow.
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Expense Stop:
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A fixed amount (typically per square foot) in a lease where the tenant is responsible for all building operating expenses and taxes in excess of a specified amount.
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GOI:
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Gross Operating Income. Income remaining after vacancy and credit losses and any additional income
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GSI:
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Gross Scheduled Income. Also known as GPI (Gross Potential Income). Total rent if all the units (rentable square footage) are rented.
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Market Rent:
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Current rent for a given type of unit and property. Usually higher than actual rents unless rents are decreasing. Often used for proforma rents.
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NNN Charges:
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Triple Net Charges. Additional charges the tenant pays other than rent to the landlord, including taxes, insurance, and maintenance expenses that arise from the use of the property.
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NOI:
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Net Operating Income. Income remaining after expenses.
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Proforma:
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A term typically used to denote the income and expenses for a property run at its best. The rents may all be market rents and the operating expenses may be those typically for a property of a certain type. Proforma demonstrates the potential of a property more than its actual performance.
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Rent Roll:
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A list of tenants occupying a building along with the terms of their occupancy.
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TI Allowance:
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Tenant Improvement Allowance. Funds allotted to a tenant for use on improvements to the property. Tenant improvements typically cover flooring, addition/deletion of rooms, painting walls, and addition of pony walls. Tenant Improvements are typically calculated on a per square foot basis.
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Vacancy:
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Amount of property that is not rented.
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Vacancy Loss:
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Actual or projected loss of income due to vacancy.
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