Commercial Real Estate Exam Review

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These flashcards cover key concepts and terminology related to commercial real estate, as reviewed in the lecture notes.

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15 Terms

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Net Operating Income (NOI)

Income - Expenses in real estate.

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Cap Rate

The ratio used to estimate the return on an investment property.

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Leverage

Using borrowed money to amplify investment power.

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PITI

Principal, Interest, Taxes, and Insurance in a mortgage context.

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Value-Add

Increasing the value of a property by improving its income-producing potential.

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Debt Service Coverage Ratio (DSCR)

A measure of cash flow available to pay current debt obligations.

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Loan-to-Value (LTV)

A financial term used by lenders to express the ratio of a loan to the value of an asset.

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Due Diligence

The process of verifying the details of a property before purchase.

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Easement

A legal right to use someone else's land for a specific purpose.

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Proforma

A financial projection that estimates future income and expenses.

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Inspection Objection

A document submitted to request repairs from the seller before closing.

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Appraisal

An expert estimate of the value of a property.

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Accessory Dwelling Unit (ADU)

A separate living space on a property that can provide rental income.

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House Hacking

A strategy where homeowners rent out part of their home to cover housing costs.

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Risk-Return Relationship

The principle that potential return rises with an increase in risk.