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Real Estate Financial Modeling Accelerator (Updated June 2024)

Prior to launching the Accelerator program, Michael and I fielded email after email requesting a more structured real estate financial modeling training program on the site. Over the years, we've covered hundreds of real estate modeling…

APY

APY (Annual Percentage Yield) is the true rate of return earned taking in compounding interest. Also known as the Annual Effective Rate, the formula for APY is as follows: APY = ( 1 + APR / n ) ^ n – 1 Periodic Rate = ( 1 + APY ) ^ (…

Age-restricted Community

In commercial real estate, this typically refers to a restriction on residential communities, where residents must be a certain age or older, often 55+. Investors often see these communities to have an advantage based on residents having surpassed…

Add Alternate

An additional item of work that is priced out by a consultant/subcontractor during the contract negotiation or bid process, but isn’t yet part of the scope of work. It is an item that an owner is considering adding to the consultant/subcontractor’s…

Adjusted Funds from Operations

A superior metric compared to FFO when evaluating a REIT’s performance. AFFO is used in order to account for any additional expenses the landlord is expected to incur over the life of the asset (such as TIs, CAPEX, leasing commissions etc.).…

Average Rate of Return

A measure of the profitability of a real estate investment or a type of return metric. The average rate of return is calculated as the total net profit of an investment (total cash inflows minus total cash outflows), divided by the length…

American-Style Waterfall

A common method for distributing investment cash flow between two or more partners. An American-Style waterfall refers to a form of equity waterfall where the sponsor (i.e. general partner) is eligible to receive a promote (i.e. carried interest)…

Trended Rents

Rental rate figures which are based upon some market growth projection. Trended rents use historical market data as an indicator of future growth, in contrast to “untrended rents” which assume no growth in annual rents. Real estate discounted…

Trophy Asset

A term used in real estate to describe a property that is in exceptionally high demand by investors. These assets are usually iconic buildings situated in prime locations with strong underlying property fundamentals. Putting 'Trophy Asset'…

Transfer Tax

A charge levied by the state or local government when property is sold from one individual/entity to another. Putting 'Transfer Tax' in Context Starfield Developments, a seasoned real estate developer, recently ventured into the redevelopment…

Total RevPAR

Also referred to as TRevPAR, Total RevPAR is a comprehensive metric used in the hospitality industry to measure the total revenue generated by a hotel, encompassing all operational departments, per available room. Unlike Revenue Per Available…

Adaptive Reuse

A repositioning strategy in real estate whereby the investor converts the use and/or design of an existing building into something new. Typical scenarios include the conversion of industrial building, schools and churches into other building…

Trailing Twelve Months

Also referred to as a T12 or TTM, the Trailing Twelve Months is a reflection of a properties last 12 months’ financial performance. The report shows actual historical data rather than forward looking estimates (typically presented by the broker)…

Title

A document that lists the legal owner of real property, and which must be transferred in a sale of the property. The title will reflect the form of ownership, which may be a sole ownership, joint tenancy, tenancy in common, or others. Putting…

Title Search

A comprehensive examination of public records to verify the legal ownership of a property and trace the historical sequence of past owners, known as the chain of title. This process aims to identify any existing encumbrances, liens, or claims…

Time Value of Money

The idea that money received today is worth more than the identical amount of money received in the future. This is because money received today can earn interest over time as well as increasing costs of goods and services over time due to inflation,…