Summary Flashcards
What is one indication of the financial position of a real estate undertaking?
Cash flow
Cash flow is an important measure of profitability in real estate.
How is cash flow calculated?
Subtracting debt service and capital expenditures from net operating income
This calculation helps in understanding the actual cash available for operations.
What does the cash-flow portion of a budget show?
How much actual cash will be generated and needed for operations and debt service
It forecasts actual cash income and outlays for the next budget period.
What is the main difference in time span among cash, operating, and long-range budgets?
Cash budget is monthly, operating budget is yearly, long-range budget is three to five years
This difference affects how financial planning is approached.
What is one way to monitor and control cash in real estate?
Consolidating bank accounts for a single property
This allows for better access to information and control of cash.
Why should receivables be collected quickly?
To ensure cash inflows are deposited in the bank promptly
Quick collection helps maintain liquidity.
How can cash outflows be controlled?
By finding ways to disburse money slowly and judiciously
This can be financially advantageous for managing cash flow.
What do tables of dollar and percentage changes track?
Dollar figures (cash flows) and percentage changes in various categories
These tables help identify trends that may not be visible through dollar figures alone.
What is the purpose of a percentage table in cash flow monitoring?
To list increases and decreases in different categories over various time periods
This aids in discerning trends in cash flow.
What do dollars per square foot tables track?
Income and expenses in relation to square footage
This allows real estate managers to compare expenses across different buildings.
What does IRR stand for in real estate finance?
Internal Rate of Return
IRR involves discounting estimated future cash flows of a property or project.
What does cash-on-cash return measure?
An investor’s rate of return on an initial investment base
It is a ratio used to assess trends in investment performance.
