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Modern Real Estate Practice in NC: Chapter 22
Terms in this set (21)
after-tax cash flow
The money left after income taxes has been subtracted from the before-tax cash flow or cash throw-off.
An increase in the worth or value of a property due to economic or related causes, which may prove to be either temporary or permanent; opposite of depreciation.
before-tax cash flow
The money left after debt service has been subtracted from the net operating income and before income tax is paid; also called cash throw-off or cash flow after debt service.
The net spendable income from an investment, determined by deducting all operating and fixed expenses from the gross income. When expenses exceed income, a negative _____ _____ results.
cash-on-cash rate of return
Derived by dividing the before-tax cash flow by the owner's cash investment; also known as equity dividend rate.
An entity or organization, created by operation of law, whose rights of doing business are essentially the same as those of an individual. The entity has continuous existence until it is dissolved according to legal procedures.
effective gross income (EGI)
The anticipated income from a rental property resulting from potential gross income minus an allowance for vacancy and bad debts.
That portion of the loan payment directed toward the principal rather than the interest, plus any gain in the property value due to appreciation.
A typical form of joint venture in which each general partner shares in the administration, profits, and losses of operation.
The gradual reduction of the purchasing power of the dollar, usually related directly to the increases in the money supply by the federal government.
The use of borrowed money to finance an investment.
limited liability company (LLC)
A hybrid business entity with combined characteristics and benefits of a limited partnership and an S corporation.
A business arrangement whereby the operation is administered by one or more general partners and funded, by and large, by limited or silent partners, who are by law responsible for losses only to the extent of their investments.
The ability to sell an asset and convert it into cash, at a price close to its true value, in a short period of time.
A detailed statement prepared on a periodic basis showing the financial picture of a business through the revenues and expenses; profit and loss statement.
An association of two or more individuals who carry on a continuing business for profit as co-owners. Under the law, is regarded as a group of individuals rather than a single entity.
real estate investment syndicate
Parties own and/or develop property, with the main profit generally arising from the sale of the property.
real estate investment trust (REIT)
Trust ownership of real estate by a group of individuals who purchase certificates of ownership in the trust, which in turn invests the money in real property and distributes the profits back to the investors free of corporate income tax.
return on investment (ROI)
An annual percentage derived from dividing cash invested into net after-tax income.
scheduled gross/rental income (SGI)
The amount of rental income the property could produce with 100% occupancy and all tenants paying full rent; also called potential gross income.
A combination of people or firms formed to accomplish a business venture of mutual interest by pooling resources.
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