Adjusted funds from operations—AFFO—is a metric used to evaluate a real estate investment trust’s (REIT’s) ability to generate cash flow from its operations. It is calculated by adding back certain non-cash items to net income, such as amortization of deferred lease income and depreciation of real estate assets, and subtracting out cash paid for capital … Read more
Equity stripping refers to a process whereby a homeowner takes out a loan against the equity in their home in order to free up cash. The loan is typically in the form of a home equity line of credit or a home equity loan. The cash can then be used for any purpose, including investment … Read more
Original face is the term used to describe the exterior finish of a building. It is the first thing that a potential buyer or tenant will see when they view the property. The original face can make or break a deal, so it is important to make sure that it is in good condition. What … Read more
A listing agreement is a contract between a homeowner and a real estate agent that gives the agent the exclusive right to market and sell the home. The agreement spells out the terms of the relationship, including the length of the agreement and the agent’s commission. When a seller signs a listing agreement who are … Read more
A CRE loan, also known as a commercial real estate loan, is a loan that is used to purchase or refinance commercial property. Commercial property can include office buildings, retail space, warehouses, and more. CRE loans are typically made by banks or other financial institutions, and they can be either secured or unsecured. The terms … Read more
The gross income multiplier (GIM) is a quick way to estimate the value of a rental property. To calculate the GIM, divide the property’s purchase price by the gross annual rental income. For example, if you buy a property for $200,000 and it generates $20,000 in annual rent, the GIM would be 10 ($200,000/$20,000). The … Read more
The Torrens certificate is a document that is issued by the government which guarantees the title to a piece of real estate. The certificate is named after the man who developed the system, Sir Robert Torrens. The Torrens system is a system of land registration which is used in many jurisdictions around the world. The … Read more
When you purchase a piece of property, the seller is warranting (guaranteeing) that they are the rightful owner of the property and have the legal right to sell it to you. This is important because if the seller does not actually own the property or if there are other claims on the property, you could … Read more
A holdover tenant is a tenant who remains in possession of a property after their lease has expired. The tenant may be required to pay rent at a higher rate, known as “holdover rent,” until a new lease can be negotiated or the tenant is removed from the premises. How is holdover rent calculated? There … Read more
A shell lease is a type of real estate lease in which the tenant leases a property that is not yet built or finished. The tenant generally agrees to pay for the construction of the property and assume responsibility for its maintenance once it is completed. Shell leases are often used by businesses that need … Read more
