Financial Analysis & Reporting Flashcards

A property's gross potential rent is $500,000 annually. With a 5% vacancy rate and $10,000 in other income, what is the Effective Gross Income (EGI)?

Answer: $485,000

EGI = GPR - Vacancy Loss + Other Income = $500,000 - $25,000 + $10,000 = $485,000.

Which financial metric measures the total return on a real estate investment, including both income and appreciation, relative to the initial equity invested?

Answer: Return on Equity

Return on Equity (ROE) measures total return including income and appreciation relative to equity invested.

In apartment leasing financials, 'concessions' are best described as:

Answer: Incentives like free rent that reduce effective rent

Concessions are incentives offered to attract tenants, such as free months of rent, which reduce the effective rent received.

A leasing professional calculates a property's Break-Even Occupancy Rate. If total operating expenses are $300,000 and gross potential rent is $500,000, what is the break-even occupancy?

Answer: 60%

Break-Even Occupancy = Total Operating Expenses / Gross Potential Rent = $300,000 / $500,000 = 60%.

Which of the following is NOT typically included in a property's operating expense calculation for NOI purposes?

Answer: Mortgage principal payments

Mortgage principal payments are a financing cost, not an operating expense, and are excluded from NOI calculations.

A 'trailing 12' financial report in multifamily leasing refers to:

Answer: Historical financial data from the past 12 months

A trailing 12 (T-12) report shows actual income and expense data from the previous 12 months of property operations.

When analyzing a rent roll, a leasing professional notices that 30% of leases expire in the same month. This is best described as:

Answer: Lease concentration risk

Having many leases expire simultaneously creates lease concentration risk, which can lead to high vacancy and revenue loss at one time.