Finance Term
What is Present Value
Value of money today
What are the 4 types of Real Estate?
Residential
Industrial
Commercial
Land
Formula for Net Operating Income (NOI)
Income - Operating Expenses = NOI
A property collects $120,000 in annual rent and has $40,000 in operating expenses. What is the NOI?
120,000 - 40,000 = 80,000
When was FMA established?
2015
What is a Dividend
Payments made to shareholders from profits
What is a NNN lease?
Taxes
Insurance
Common Area Maintenance
LTV
Loan / Value = LTV
A property has an NOI of $90,000 and sells for $1,500,000. What is the cap rate?
90,000 / 1,500,000 = 0.06
When was the Real Estate Club established?
2022
What is Compound Interest?
interest earned on both the principal and previously earned interest
At how many units is a property considered commercial instead of residential?
more than 4
Formula for Property Value
NOI / Cap Rate% = Property Value
A property is worth $2,000,000 and the loan amount is $1,500,000. What is the loan-to-value ratio?
1,500,000 / 2,000,000 = 0.75
How many students are currently enrolled at UTEP?
26,000 students
What is IRR?
The expected yearly return rate of an investment.
What is a 1031 exchange?
An exchange of properties that allows owners to defer taxes.
Formula for Return on Investment (ROI)
( Gain - Cost ) / Cost
A company has fixed costs of $20,000, sells products for $50, and has variable costs of $30 per unit. What is the break-even point in units?
Break-Even = 20,000 ÷ (50 − 30) = 20,000 ÷ 20 = 1,000 units
What was the total construction cost for the new Texas Western Hall?
$109.5M
What are Comp Ratios?
comparing a company’s numbers to similar companies to see if it is overvalued or undervalued.
What is a covenant in Real Estate?
A restriction or rule placed on a property, often by an HOA or developer
Formula for Debt Service Coverage Ratio (DSCR)
Net Operating Income / Annual Debt Service
A firm has debt costing 5%, equity costing 10%, with a capital structure of 40% debt and 60% equity. What is the WACC?
(0.6 × 10%) + (0.4 × 5%) = 6% + 2% = 8%
How many buildings does UTEP currently have?
107