Valuation
Nonrecourse loan
Appraiser
LTV stands for this.
Loan-to-value
Office, retail, industrial, and this make up the four core property types
Multifamily
Gross income minus operating expenses, before debt service.
NOI (net operating income)
It’s the largest ocean on Earth.
What is the Pacific Ocean?
Recently sold, similar properties used to estimate a property’s value.
Comps
A mortgage whose interest rate resets periodically
ARM (adjustable-rate mortgage)
A lease where the tenant pays base rent plus taxes, insurance, and maintenance
Triple Net NNN
Annual pre-tax cash flow ÷ equity invested.
Cash-on-cash return
She wrote Pride and Prejudice
Who is Jane Austen?
he appraisal approach that asks what it would cost to rebuild the property today.
Cost approach
One discount point equals this percentage of the loan amount.
1%
Office buildings are graded into these three classes by quality.
Class A, B, and C
The discount rate that makes NPV equal zero
IRR
This artist painted The Starry Night.
Vincent van Gogh?
The appraisal approach that values a property by the income it produces.
Income approach
DSCR = NOI ÷ this.
Annual debt service
A large tenant, like a grocery store, that drives traffic to a shopping center.
Anchor tenant
Total distributions ÷ total equity invested.
Equity multiple
It’s the smallest country in the world by area.
What is Vatican City?
In direct capitalization, Value = NOI ÷ this.
Cap rate
A loan where the lender can only seize the property, not the borrower’s other assets.
Nonrecourse loan
Money a landlord gives a tenant to build out their space.
TI (tenant improvement) allowance
What it’s called when the cost of debt is higher than the property’s return, so borrowing hurts returns
Negative leverage
It’s the only U.S. state that borders just one other state.
What is Maine?