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Real Estate Dictionary

What is Unlevered Free Cash Flow (UFCF)?

The Unlevered Free Cash Flow (UFCF) formula calculates the cash flow available to all investors (both debt and equity holders) before accounting for interest payments and debt obligations. It is used to assess a company’s financial health and valuation, particularly in Discounted Cash Flow (DCF) analysis.

March 7, 2025

What is Reinvestment Risk and How Does it Apply to Real Estate?

Reinvestment risk in real estate occurs when investors must reinvest proceeds from property sales, loan repayments, or rental income at lower returns due to changing market conditions, which can be mitigated through diversification, strategic financing, and value-add opportunities.

March 7, 2025

If the Housing Market Crashes, What Happens to Interest Rates?

If the housing market crashes, the Federal Reserve will likely cut interest rates to stimulate the economy, but mortgage rates may not drop as much if lenders tighten credit or if inflation remains a concern.

March 7, 2025

What is an Add Alternate in Real Estate Development?

An Add Alternate in real estate development is an optional project component included in a construction bid, allowing developers to flexibly add features based on budget availability without rebidding.

March 4, 2025

The Most Useful Excel Shortcuts for Real Estate Financial Modeling

Mastering Excel shortcuts like Ctrl + Arrow Keys for navigation, Ctrl + Shift + L for filtering, F2 for formula editing, Alt + = for AutoSum, and Ctrl + T for tables can significantly speed up real estate financial modeling by improving efficiency in data entry, formatting, calculations, and analysis.

March 4, 2025

What is the Difference Between a Lien Theory and Title Theory State?

In lien theory states, the borrower holds title and foreclosure requires a judicial process, while in title theory states, the lender (or trustee) holds title until the loan is paid off, allowing for faster, non-judicial foreclosures.

March 4, 2025

Is Texas a Lien Theory State?

Yes, Texas is a title theory state, not a lien theory state. In a title theory state, the borrower (mortgagor) gives legal title to the lender (mortgagee) or a trustee through a deed of trust until the loan is paid off.

March 4, 2025

What is WALT in Real Estate and How is it Calculated?

WALT (Weighted Average Lease Term) in real estate measures the average remaining lease duration of tenants, weighted by leased area or rental income, and is calculated as the sum of (lease term × weight) divided by the total weight, helping assess income stability and lease rollover risk.

March 4, 2025

What is a Future Value Factor in Real Estate Financial Modeling?

A Future Value Factor (FVF) in real estate financial modeling is a multiplier, calculated as ( 1 + 𝑟 ) 𝑛 (1+r) n, used to project future cash flows or property values by applying compound growth over time.

March 4, 2025

What is a Catch-up in Real Estate Financial Modeling?

A catch-up is a provision in a waterfall model that allows the sponsor (GP) to receive a larger share of profits after investors (LPs) achieve their preferred return, ensuring the GP is fully compensated for their promote before standard profit splits begin.

March 4, 2025
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