Multifamily Real Estate Glossary

What is velocity billing in multifamily?

Velocity billing in multifamily properties is a method that accelerates utility billing by using estimated usage data to bill tenants more quickly, improving cash flow but potentially leading to accuracy concerns.

January 16, 2024

What is lease roll-over in multifamily investment?

Lease roll-over in multifamily investment involves the renewal or signing of new leases as existing leases expire, influencing rental income and occupancy levels in the property.

January 14, 2024

What does it mean if cap rate is lower than interest rate?

If a property's cap rate is lower than the interest rate on its financing, it implies that the income from the property may not cover the debt service, potentially leading to negative cash flow and a lower return on investment.

January 14, 2024

What is exit cap rate?

The exit cap rate is the anticipated capitalization rate used to estimate a property's selling price in the future, based on its projected net operating income and expected market conditions at the time of sale.

January 14, 2024

What is going-in cap rate?

The going-in cap rate is a measure of potential return on investment, calculated by dividing the annual net operating income by the purchase price or current market value of the property.

January 14, 2024

What is functional obsolescence in real estate?

Functional obsolescence in real estate occurs when a property's design, layout, or amenities become outdated, reducing its value and desirability in comparison to current market preferences.

January 14, 2024

What is physical obsolescence in real estate?

Physical obsolescence in real estate refers to the loss in property value due to aging and deterioration of the physical structure and its components, such as outdated plumbing, worn roofing, and inefficient heating systems.

January 14, 2024

What are the types of obsolescence in real estate?

In real estate, obsolescence is categorized into physical obsolescence (wear and tear), functional obsolescence (outdated design or amenities), and external or economic obsolescence (negative external factors), each affecting property value differently.

January 14, 2024

What is external obsolescence in real estate?

External obsolescence in real estate is a decline in property value due to uncontrollable external factors such as neighborhood deterioration, economic changes, or environmental risks, significantly impacting its marketability and profitability.

January 14, 2024

What are the two types of physical depreciation in real estate?

In real estate, curable and incurable depreciation are used to assess and strategize property value, guiding decisions in appraisal, maintenance, investment analysis, and marketing by distinguishing between economically fixable wear and tear and more significant, often unfixable issues.

January 14, 2024

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Multifamily Real Estate Glossary

What is velocity billing in multifamily?

What is lease roll-over in multifamily investment?

What does it mean if cap rate is lower than interest rate?

What is exit cap rate?

What is going-in cap rate?

What is functional obsolescence in real estate?

What is physical obsolescence in real estate?

What are the types of obsolescence in real estate?

What is external obsolescence in real estate?

What are the two types of physical depreciation in real estate?

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