Real Estate Private Equity (REPE) Guide
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REIT Guide (Industry Overview and Valuation Drivers)
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Cap Rate: Understand the Most Important Real Estate Metric
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Demystifying Funds from Operations (FFO)
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Real Estate Financial Modeling Case Study (Excel Template)
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Insider's Guide to the Top Real Estate Investing Books (REPE)
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All Real Estate Content
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Adjusted Funds from Operations (AFFO)
Adjusted Funds from Operations (AFFO)What is AFFO? Adjusted Funds from Operations (AFFO) measures the financial performance of real estate investment trusts (REITs), particularly in their capacity to support the issuance of dividends to...
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Average Daily Rate (ADR)
Average Daily Rate (ADR)What is Average Daily Rate (ADR)? The Average Daily Rate (ADR) measures the average revenue generated per occupied room, or rental unit, expressed on a per-day basis.
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Cap Rate
Cap RateWhat is Cap Rate? The Cap Rate, or capitalization rate, is calculated as an investment’s net operating income divided by the value of the investment and is expressed as a percentage.
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Cash on Cash Return
Cash on Cash ReturnWhat is Cash on Cash Return? The Cash on Cash Return (CoC) is a real estate metric comparing an investment property’s pre-tax cash flows to the initial equity investment.
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Commercial Real Estate Interview Questions
Commercial Real Estate Interview QuestionsCommon Commercial Real Estate Interview Questions We’ve compiled the most frequently asked commercial real estate interview questions in the following post to help candidates prepare for CRE rol...
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Debt to Income Ratio (DTI)
Debt to Income Ratio (DTI)What is Debt to Income Ratio? The Debt to Income Ratio (DTI) measures the creditworthiness of a consumer by comparing their total monthly debt payment obligations to their gross monthly income.
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Debt Yield
Debt YieldWhat is Debt Yield? The Debt Yield measures the riskiness of a real estate loan by estimating the return earned by the lender to recoup the original investment in the event of property foreclosure.
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Development Spread
Development SpreadWhat is Development Spread? The Development Spread is the difference between a real estate development project’s yield on cost and the market cap rate, expressed as a percentage.
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Development Yield
Development YieldWhat is Development Yield? The Development Yield represents the potential return earned on a development property investment, expressed as a percentage.
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Effective Gross Income (EGI)
Effective Gross Income (EGI)What is Effective Gross Income? The Effective Gross Income (EGI) is defined as the total potential revenue generated by a real estate rental property investment, net of any vacancy and credit losses
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Funds from Operations (FFO)
Funds from Operations (FFO)What is FFO? Funds from Operations (FFO) is a measure of cash generated by a Real Estate Investment Trust (REIT).
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Gross Rent Multiplier (GRM)
Gross Rent Multiplier (GRM)What is Gross Rent Multiplier? The Gross Rent Multiplier (GRM) compares a property’s fair market value to its expected gross annual rental income. The ratio between a real estate property investment’s...
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Home Equity Line of Credit (HELOC)
Home Equity Line of Credit (HELOC)What is a HELOC? A Home Equity Line of Credit (HELOC) is a secured loan wherein the borrowing capacity is a set based on a percentage of the borrower’s home equity. The lender provides the borrower of...
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Leasehold Improvements
Leasehold ImprovementsWhat are Lease Improvements? Leasehold Improvements are expenditures that relate to the improvement of a leased property, which are amortized over either the lease term or the estimated useful life.
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Lessor vs. Lessee
Lessor vs. LesseeWhat is Lessor vs. Lessee? The difference between a Lessor vs. a Lessee is that the lessor lends an asset, such as equipment or property, to the lessee, in exchange for periodic interest payments thro...
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Loan to Cost Ratio (LTC)
Loan to Cost Ratio (LTC)What is Loan to Cost Ratio? The Loan to Cost (LTC) is the ratio between the total size of a loan and the total development cost of a real estate project, expressed as a percentage. The LTC ratio is mo...
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Loan-to-Value Ratio (LTV)
Loan-to-Value Ratio (LTV)What is Loan-to-Value Ratio? The Loan-to-Value Ratio (LTV) refers to the relationship between a loan amount and the appraised fair value of the asset securing the loan, e.g. property, home, automobile...
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Loss to Lease (LTL)
Loss to Lease (LTL)What is Loss to Lease? Loss to Lease (LTL) is a multi-family real estate metric that quantifies the loss in potential revenue attributable to a difference between a property’s market rental rate and t...
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Net Absorption
Net AbsorptionWhat is Net Absorption? Net Absorption measures the supply and demand in the commercial real estate market, i.e. the change in tenant demand relative to the supply available in the market.
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Net Effective Rent
Net Effective RentWhat is Net Effective Rent? The Net Effective Rent is the actual rental cost paid by a renter, factoring in deductions related to concessions and promotions.
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Net Operating Income (NOI)
Net Operating Income (NOI)What is Net Operating Income (NOI)? Net Operating Income (NOI) is the most important profit measure in real estate. It strives to isolate to core operating profits of real estate assets, so as to avo...
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NOI Margin
NOI MarginWhat is NOI Margin? The NOI Margin is a profitability ratio that compares a real estate property’s net operating income (NOI) to its revenue, expressed as a percentage.
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NOI vs. EBITDA
NOI vs. EBITDAWhat’s the Difference Between NOI vs. EBITDA? NOI and EBITDA are two similar measures of profitability in real estate with some key differences.
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Occupancy Rate
Occupancy RateWhat is the Occupancy Rate? The Occupancy Rate represents the ratio of occupied to total rental units. The formula for calculating the occupancy rate divides the number of occupied rooms by the total...
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Potential Gross Income (PGI)
Potential Gross Income (PGI)What is Potential Gross Income? The Potential Gross Income (PGI) is the hypothetical total earnings that could be realized on a real estate rental property, assuming a full occupancy rate and on-time...
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Real Assets vs. Financial Assets
Real Assets vs. Financial AssetsWhat are Real Assets? Real Assets are tangible resources, namely real estate, infrastructure, and commodities, with an intrinsic value tied to their utility, i.e. ability to produce goods or services.
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Real Estate Investment Firms
Real Estate Investment FirmsWhat are Real Estate Investment Firms? If you’ve ever purchased a single family home, you are likely already familiar with the parties involved in real estate: You have the seller (usually just...
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Real Estate Multifamily Acquisition Financial Model
Real Estate Multifamily Acquisition Financial ModelReal Estate Multifamily Acquisition Model Introduction In this article, we will walk you through a back-of-the-envelope (“BoE”) Multifamily Acquisition Model that introduces some of the co...
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Real Estate Private Equity (REPE)
Real Estate Private Equity (REPE)What is Real Estate Private Equity? Real Estate Private Equity (REPE) or Private Equity Real Estate (PERE) refers to firms that raise capital to acquire, develop, operate, improve, and sell buildings...
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REIT Industry Guide
REIT Industry GuideWhat is a REIT? Real estate investment trusts (“REITS”) are companies that own real estate portfolios across a range of property sectors such as offices, retail, apartments, hospitals and...
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REIT Valuation Methods
REIT Valuation MethodsREIT Valuation Methods REIT Valuation is commonly performed by analysts using the following 4 approaches Net asset value (“NAV”) Discounted cash flow (“DCF”) Dividend discount model (“DDM”) Multiples...
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REPE Book Recommendations
REPE Book RecommendationsBest Real Estate Books As a real estate private equity professional, I have certain "must-read" books on my bookshelf. Below is a list of those books, broken down by book types. Please note that we d...
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Vacancy Loss
Vacancy LossWhat is Vacancy Loss? Vacancy Loss, or “credit loss”, is the rental income lost by a property owner from unoccupied space, i.e. vacant units with no tenants.
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Vacancy Rate
Vacancy RateWhat is Vacancy Rate? The Vacancy Rate refers to the percentage of unoccupied units relative to the total number of rental units available at a property over a specified period. An unoccupied unit doe...
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Yield on Cost (YoC)
Yield on Cost (YoC)What is Yield on Cost? The Yield on Cost (YoC) is a real estate property’s stabilized net operating income (NOI) divided by its total cost, expressed as a percentage. Conceptually, the yield on cost m...