Term
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Definition
these stops place an upper limit on the amount of operating expenses that will have to be paid by the owner...excess paid by tenant..usually based on
- the tenants pro rata share
- categories of expenses that the lessor and lessee agree will be included in the stop
- the actual amount of operating expenses at the time the lease is signed
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Term
For a newly developed property the tenant and property owner usually negotiate the amount of the stop.
T/F |
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Definition
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Term
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Definition
| rate that makes the present value of the projected cash flows equal to the initial investment...return on entire property |
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Term
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Definition
| subtract debt service from NOI |
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Term
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Definition
dividing the BTCF by the equity investment
...rough estimate of current return on equity
BTCF
Equity Investment
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Term
| How do you calculate the amount of equity in an investment? |
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Definition
| Purchase price less amount borrowed |
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Term
| Why is the equity dividend rate not an investment yield? |
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Definition
| It does not take into account future cash flows from operations or sale of the property |
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Term
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Definition
| ratio of NOI to the Mortgage Payment |
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Term
| When calculating the DCR and CF's are expected to change over time, which years NOI do you use? |
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Definition
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Term
Lenders typically want the DCR to be at least
- 1.1
- 1.0
- 1.2
- .8
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Definition
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Term
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Definition
| individuals holding property for resale to others |
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Term
| Taxable Income from operating real estate calculation: |
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Definition
| Taxable Income=NOI-Interest-Depreciation Allowance |
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Term
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Definition
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Term
| Theoretical Basis for tax depreciation |
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Definition
| Because buildings must be replaced, and because tax law allows investment in improvements to be recovered before income produced from the improvements is taxed, the investor may take a deduction for capital recovery from NOI prior to the determination of taxable income...this investors should only be taxed on the income net of this economic allowance for depreciation |
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Term
| Increasing the depreciable life of real estate.... |
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Definition
| reduce favorable tax treatment |
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Term
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Definition
| amount that can be depreciated for real estate improvements....basis is generally the cost of the improvements |
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Term
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Definition
| acquisition price plus install costs |
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Term
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Definition
| taxable income * marginal tax rate |
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Term
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Definition
| the investor does not materially(which means involvement in the operations of a regular, continues, and substantial basis) participate in the management or operation of the property |
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