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Finance, Accounting & Investment
1031 Exchange
A 1031 Exchange is a U.S.
Property Management Excellence Glossary
Property Finance, Accounting, and Investment
Financial terms become useful when they improve an owner decision. This collection connects accounting records, operating performance, risk, capital allocation, and investment outcomes so owners and managers can evaluate what the numbers mean and what should happen next.
Curated definitions
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Finance, Accounting & Investment
Accounts Payable
Accounts Payable is money the property owes to vendors, utilities, taxing authorities, insurers, and other parties.
Finance, Accounting & Investment
Accounts Receivable
Accounts Receivable is money owed to the property, including rent, recoveries, fees, reimbursements, and other billed charges.
Finance, Accounting & Investment
Acquisition Fee
An acquisition fee compensates the sponsor for sourcing, underwriting, financing, and closing an investment.
Finance, Accounting & Investment
Aged Receivables
Aged Receivables is the report grouping unpaid amounts by the length of time outstanding.
Finance, Accounting & Investment
Amortization
Amortization is the scheduled repayment of loan principal over time through periodic payments.
Finance, Accounting & Investment
Appreciation
Appreciation is the increase in property value over time due to market conditions, income growth, improved condition, reduced risk, or other factors.
Finance, Accounting & Investment
Asset Management Fee
An asset management fee compensates the sponsor or asset manager for strategic oversight of an investment, including business-plan execution, reporting,...
Finance, Accounting & Investment
Bad Debt
Bad Debt is a receivable that is unlikely to be collected based on age, circumstances, legal status, or collection history.
Finance, Accounting & Investment
Break-Even Occupancy
Break-Even Occupancy is the occupancy level at which property revenue is sufficient to cover the expenses included in the calculation.
Finance, Accounting & Investment
Budget Variance
Budget Variance is the difference between budgeted and actual performance for a defined line item and period.
Finance, Accounting & Investment
Budget versus Actual
Budget versus Actual compares planned income and expenses with the amounts recorded for the same period.
Finance, Accounting & Investment
Cap Rate
Cap Rate, or capitalization rate, is net operating income divided by property value or purchase price.
Finance, Accounting & Investment
Capital Call
A capital call is a request for investors to contribute additional funds under the governing agreement.
Finance, Accounting & Investment
Cash Flow
Cash Flow is the cash generated or consumed after income and required cash expenses during a period.
Finance, Accounting & Investment
Cash Management
Cash management is the system for forecasting receipts and disbursements, maintaining reserves, controlling bank activity, timing owner distributions,...
Finance, Accounting & Investment
Cash-on-Cash Return
Cash-on-Cash Return is annual pre-tax cash flow divided by the actual cash invested.
Finance, Accounting & Investment
Chart of Accounts
A Chart of Accounts is the standardized list of income, expense, asset, liability, equity, and other account categories used to code property transactions.
Finance, Accounting & Investment
Comparable Property
A Comparable Property is an asset selected for comparison based on relevant similarities such as location, use, size, age, condition, tenant profile,...
Finance, Accounting & Investment
Cost Basis
Cost basis is the tax and accounting value assigned to an investment, generally starting with purchase cost and adjusted for capital improvements,...
Finance, Accounting & Investment
Credit Risk
Credit risk is the possibility that a tenant, borrower, or counterparty will fail to meet payment obligations.
Finance, Accounting & Investment
Debt Service
Debt service is the principal and interest required on a loan during a period.
Finance, Accounting & Investment
Debt Service Coverage Ratio
Debt Service Coverage Ratio is net operating income divided by required debt service for the same period.
Finance, Accounting & Investment
Debt Yield
Debt Yield is net operating income divided by the outstanding loan amount.
Finance, Accounting & Investment
Depreciation
Depreciation is the allocation of the tax or accounting basis of certain property improvements over their permitted useful lives.
Finance, Accounting & Investment
Distribution Waterfall
A distribution waterfall defines how cash flow and sale proceeds are allocated among investors and sponsors across sequential tiers.
Finance, Accounting & Investment
Due Diligence
Due Diligence is the structured investigation of a property, lease portfolio, financial history, physical condition, compliance, contracts, title,...
Finance, Accounting & Investment
Equity
Equity is the owner’s residual interest in a property after subtracting debt and other senior claims from value.
Finance, Accounting & Investment
Equity Multiple
Equity Multiple is total cash distributed to investors divided by total equity invested.
Finance, Accounting & Investment
Exit Strategy
An Exit Strategy is the planned path for realizing, refinancing, transferring, or otherwise repositioning an investment.
Finance, Accounting & Investment
Forecast
A Forecast is the current estimate of future property performance based on actual results, known commitments, market conditions, leasing expectations,...
Finance, Accounting & Investment
General Ledger
The General Ledger is the complete accounting record of property transactions organized by account.
Finance, Accounting & Investment
General Partner
The general partner is the sponsor or managing party responsible for finding, financing, operating, and ultimately exiting a syndicated investment.
Finance, Accounting & Investment
Hold Period
Hold Period is the length of time an owner expects to retain an investment before sale, transfer, recapitalization, or other exit.
Finance, Accounting & Investment
Interest-Only Loan
An interest-only loan requires interest payments without scheduled principal reduction during the interest-only period.
Finance, Accounting & Investment
Internal Rate of Return
Internal Rate of Return is the discount rate that makes the present value of projected cash inflows and outflows equal to zero.
Finance, Accounting & Investment
Leverage
Leverage is the use of debt to finance a property or investment.
Finance, Accounting & Investment
Limited Partner
A limited partner contributes capital to a real estate investment but generally does not manage day-to-day operations.
Finance, Accounting & Investment
Loan Maturity
Loan maturity is the date the outstanding loan balance becomes due.
Finance, Accounting & Investment
Loan-to-Value Ratio
Loan-to-Value Ratio is the loan balance divided by the property’s value.
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Finance, Accounting & Investment
Net Operating Income
Net Operating Income is property income remaining after normal operating expenses and before debt service, income taxes, depreciation, and most capital...
Finance, Accounting & Investment
Operating Budget
An Operating Budget is the time-phased plan for property income and recurring operating expenses, built from lease terms, contracts, historical patterns,...
Finance, Accounting & Investment
Operating Expense
An Operating Expense is a recurring cost required to operate and maintain the property, such as utilities, routine repairs, insurance, taxes, contracts,...
Finance, Accounting & Investment
Operating Expense Ratio
The operating expense ratio compares operating expenses with effective gross income.
Finance, Accounting & Investment
Owner Distribution
An Owner Distribution is cash transferred from the property or management account to the owner after considering collected funds, paid obligations,...
Finance, Accounting & Investment
Owner Statement
An Owner Statement is the periodic financial summary provided to the property owner, typically showing income, expenses, cash activity, balances,...
Finance, Accounting & Investment
Preferred Return
A preferred return is a priority return distributed to specified investors before profits are split under later tiers of the waterfall.
Finance, Accounting & Investment
Pro Forma
A Pro Forma is a forward-looking model of expected income, expenses, capital needs, financing, and returns based on stated assumptions.
Finance, Accounting & Investment
Property Management Fee
A property management fee compensates the manager for agreed operating services.
Finance, Accounting & Investment
Property Valuation
Property Valuation is the process of estimating what a property is worth using income, comparable sales, replacement cost, market conditions, lease risk,...
Finance, Accounting & Investment
Refinance
A refinance replaces existing debt with a new loan, often to change the interest rate, term, proceeds, or lender.
Finance, Accounting & Investment
Reforecast
A Reforecast is a formal update to the expected full-year or future result after actual performance or assumptions change.
Finance, Accounting & Investment
Rent Collection Rate
Rent Collection Rate is the amount of rent collected divided by the amount due for a stated period, using a clearly defined timing and treatment of prior...
Finance, Accounting & Investment
Resident Ledger
A Resident Ledger is the transaction-level record of charges, payments, credits, adjustments, deposits, and balance for a residential tenancy.
Finance, Accounting & Investment
Return on Investment
Return on Investment compares the gain or benefit from an investment with the amount invested.
Finance, Accounting & Investment
Syndication
A real estate syndication pools capital from multiple investors to acquire and operate a property.
Finance, Accounting & Investment
Trailing Twelve Months
Trailing Twelve Months is a rolling statement of the most recent twelve months of operating performance.
Finance, Accounting & Investment
Value-Add Strategy
A Value-Add Strategy seeks to improve property income, condition, tenant appeal, operations, or risk profile through targeted capital and management...
Finance, Accounting & Investment
Write-Off
A Write-Off is the accounting removal of a receivable from active collectible balances when it meets the organization’s criteria.
Finance, Accounting & Investment
Yield on Cost
Yield on Cost is stabilized net operating income divided by total project cost.