Real Estate 101 Flashcards
What are the 5 major commercial real estate property types
Hospitality, Retail, Industrial, Office, and Multi-Family
What is the typically cap rate for hospitality
7-10%
What is the typically cap rate for retail
6-9%
What is the typically cap rate for Industrial
5-7%
What is the typically cap rate for office
4-7%
What is the typically cap rate for Multifamily
3.5-6%
What is the asset with the lowest cap rate
multi family (3.5-6%)
What is the asset with the highest typical cap rate
Hospitality
Define Core
Very low risk, 4-7% per year, high quality in major markets.
Define Core Plus
Low to moderate, 7-10%, more risk due to factors like minor renovations, leasing challenges, or properties in secondary markets.
Define Value Add
Moderate to high risk, 10-15%, hese properties often have below-market rents, high vacancy rates, or other issues that need to be addressed to realize significant capital gains.
Define Opportunistic
High risk, 15%+, These properties often require major redevelopment, complete repositioning, or are located in emerging or distressed markets.
what is the acronym for the five property types?
HRIOM
what is the acronym for the four risk return profiles?
CCVO
What are the four risk return profiles
Core, Core plus, Value Add, and Opportunistic
Define Cap Rate
Metric that estimates rate of return on a property.
what is the equation for cap rate?
NOI/Asset Value
What is IRR stand for?
(Internal Rate of Return)
define IRR
shows a return earned by an investor over a defined period of time, calculated on the basis of cash flows
What is the equation for equity multiple?
Total Cash Distribution/ Total equity invested.
What does an equity multiple less than 1.0 mean?
An equity multiple less than 1.0x means you are getting back less cash than you invested. An equity multiple greater than 1.0x means you are getting back more cash
What does NOI stand for?
Net Operating Income
What does CF stand for?
Cash Flow
What does DCF stand for?
Discounted Cash Flow
What does LTV stand for?
Loan to value
What does DSCR stand for?
Debt service coverage ratio
