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Multifamily Real Estate Glossary

Multifamily Real Estate Glossary

What is a waterfall model?

The waterfall model is a tiered distribution system where investment returns are allocated first to investor capital and preferred returns, followed by a catch-up phase for the general partner, and finally, split between all partners based on agreed ratios.

January 25, 2024

What are the advantages of an interest only multifamily loan?

Interest-only multifamily loans offer lower initial payments and potential tax benefits, enhancing cash flow for reinvestment and property improvement, but come with the risk of higher future payments and principal repayment.

January 25, 2024

What is Stabilized Occupancy?

Stabilized occupancy is when a rental property, often a multifamily or commercial building, has reached a consistent level of tenant occupancy that is sustainable and expected to continue, indicating a balance between tenant turnover and new leases.

January 24, 2024

What is a rent premium in multifamily?

A rent premium in multifamily real estate is the extra amount tenants pay for properties with desirable features such as prime locations, upgraded amenities, unit renovations, and superior building facilities, reflecting the added value of these enhancements.

January 24, 2024

What is an SREO in Real Estate?

The Schedule of Real Estate Owned (SREO) in real estate is a comprehensive document listing an investor's properties, detailing aspects like purchase price, market value, mortgages, and income, used primarily for loan applications and portfolio assessment.

January 24, 2024

AAR vs IRR in real estate

In real estate, Average Annual Return (AAR) offers a simple yearly return calculation without time value considerations, while Internal Rate of Return (IRR) provides a comprehensive analysis of investment growth by accounting for the time value of money in cash flow projections.

January 24, 2024

What are typical predevelopment costs in real estate?

Predevelopment costs in real estate cover a range of expenses like land acquisition, feasibility studies, design, legal fees, permitting, site preparation, and financing charges, all incurred before construction begins.

January 24, 2024

Is hard money considered cash in real estate?

Hard money is a type of fast-processing loan from private lenders, considered closer to cash than traditional financing but not equivalent to actual cash transactions.

January 24, 2024

What is seller carry back in real estate?

Seller carry back, or seller financing, is a real estate agreement where the seller finances the buyer, setting terms like interest rates and repayment schedules, offering benefits and risks to both parties.

January 24, 2024

How does a TIF district work?

A TIF, or Tax Increment Financing District is a designated area where increased property tax revenues from new development are used to finance public improvements within that area, with the goal of spurring economic growth and urban renewal.

January 23, 2024
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