industrial Real Estate Jargon Investors Should Know

Homes For Rent - industrial Real Estate Jargon Investors Should Know

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Commercial real estate speculation is a new territory for many real estate investors. The following is the alphabetical list of most generally used terms in this area.

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Homes For Rent

Anchored tenants: big brand-name national tenants, e.g. Albertsons, Longs Drug, Walmart that bring in lots of traffic to the shopping center.

Cam: tasteless Area Maintenance. related with Cam is Cam fees. For Nnn leases, the term Cam fees refer to the money tenants pay landlord to cover asset taxes, insurance and maintenance.

Cap rate: Return of speculation in the first year of ownership. Capitalization rate is the ratio of 1st year Net Operating wage over the purchase price. The higher the cap rate, the higher the rental income. For citizen who spend in the stock market, cap rate is the inverse of P/E ratio.

Cash on cash: annual percentage return of your down cost not including appreciation. First year cash flow divided by your first down payment.

Conduit loan: also called commercial Mortgage Backed Securities (Cmbs) loan often with the lower rate than primary commercial loan but either has high pre-payment penalty (called defeasance or Yield Maintenance Penalty) or does not have payoff flexibility.

Cpd: Car Per Day or traffic volume on a road.

Cpi: consumer Price Index. It's often used to theorize annual rental growth to compensate for inflation.

Due Diligence Period: the duration after acceptance regularly 15-30 days to allow buyer to explore about the property. Buyer can cancel the ageement while this time for any reasons and get full repayment of the deposit.

Estoppel Certificate: a letter in case,granted and signed by tenant confirming the current rent and terms.

Full-service lease: lease in which tenant pays rent that covers all things including utilities.

Gross income: total annual wage before any expenses.

Gross lease: lease in which tenants just pay rent. Landlord pays tax, insurance, & maintenance.

Gla: Gross Leaseable Area or total rentable area. This is the space that can be leased and receive rental income. It does not include spaces for utilities room, elevator, etc.

Grm: Gross Rent Multiplier for apartment. Ratio of purchase price over annual income.

Llc: small Liabilities Company. A legal entity many investors formed to own commercial properties.

Loi: Letter of Intent/Interest or the regularly non-binding offer letter used to make an offer to buy a commercial property.

Mai appraiser: Member assessment design commercial appraiser.

Master lease: lease signed by the seeder to rent the vacant space to furnish rent guarantee.

Mixed Use: commercial properties with sell on 1st floor and apartment on upper floors.

Triple Net (Nnn) lease: lease in which tenants pay base rent plus asset tax, insurance & Cam fees. Absolute Nnn lease is Nnn lease that tenants also pay asset administration fee.

Noi: Net Operating Income. annual wage after all expenses (property taxes, ins., & maintenance) except mortgage payment.

Pad: stand alone construction in a prime location of a big shopping center.

Pass Thru: see reimbursement.

Percentage lease: lease in which tenant pays base rent plus a percentage of tenant's revenue.

Phase I Report: inspection narrative that provides an assessment for soil/environment contamination. It's regularly required by the lender as part of loan approval process for a commercial property.

Phase Ii Report: inspection narrative for soil & groundwater subsurface investigation. This inspection is more extensive which involves testing to see if there is any soil and water contamination.

Proforma income: potential, i.e. Higher, wage when the asset is 100% leased.

Proforma Cap rate: possible cap rate assuming asset is 100% leased at store rent.

Reimbursement: the share of asset tax, insurance & Cam fees that a tenant has to pay the landlord besides the base rent.

Rent guarantee: rent paid by the seeder to buyer for vacant spaces until they are leased.

Sba Loan: a government-guaranteed loan for owner-occupied properties.

Snda: Subordination, Non-disturbance, and Attornment. It's an agreement required by lender, signed by the tenants agreeing: the new lien in 1st position; lender as landlord in case of foreclosure; lease as valid as long as tenant is not in default.

Tic: Tenants In Common. A way for small/self-directed Ira investors to own a fraction of high-valued properties as tenants in common.

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