If you’re interested in joining the Property Management industry or have just joined the industry, knowing the various terms associated with it is extremely helpful. These terms apply to Property Management and rental situations. Read through this glossary to see if you are familiar with all these terms.
Accounts Receivable (AR): in the context of property management, these are the rents and fees due to the property by its tenants.
Affordable Housing: type of housing that a federal or state agency governs to help and control the rent to those who meet a certain predetermined criterion
Amenities: a desirable or useful feature or facility of a property – fitness area, common areas, open spaces
Apartment and Office Building Association (AOBA): the leading membership organization representing commercial office building and multi-family residential real estate offices in the DC area
Bad Debt: uncollected rental income due to non-payment, specifically that which you do not believe can be recovered
Break Even Occupancy Rate: calculates the occupancy level needed to earn enough to pay the operating expenses and debt service
Break Even Rent Per Square Foot: calculates the rent per square foot needed to pay the operating expenses and debt service
Broker: a real estate professional who buys or sells properties for others.
Capitalization: the process of eliminating the market value of a property by applying a proper investment rate of return to the annual net operating income expected to be produced by the property
Capital Expenses (CE): non-recurring capital expenditures such as appliance replacement, renovations, roofing, etc.
Capitalization Rate: a rate of return used to measure property’s value based on its NOI
Cash-on-Cash Return: measures the amount of cash earned against original cash invested
CNON: certified notices for New York
Conventional Housing: housing that conforms to the market rate of the area’s housing
Cost Benefit Analysis: an analysis weighing the cost against the possible resulting benefits
Debt Service: a mortgage or loan payment (principal and interest)
Delinquency: unpaid rent and fees – can be expressed as a percentage of rents due, a percentage of tenants owing, or as a value such as total amount outstanding or total tenants late.
Effective Gross Income (EGI): the amount of Gross Potential Rent (GPR) less vacancy, concession, collection loss and nonrevenue units plus other income
Fair Housing Act: law that was put into effect to stop discrimination based on race, age, color, handicap, sex, religion, etc.
Gross Potential Rent (GPR): the amount of rent that would be collected if a property was 100% occupied and all residents were paying market rent
Housing Assistance Payments (HAP) Contracts: used so that those under the voucher program can receive government assistance and supplement
Housing and Urban Development (HUD): a governmental agency that works to increases the access to housing that is affordable without discrimination, supports the development of the community, and increases homeownership rates
Income Capitalization Approach: uses methods, techniques and mathematical procedures to analyze a property’s ability to generate income and convert future earnings to present day dollars
Key Performance Indicator (KPI): a type of performance measurement
Lease-up Budget: when a property is constructed, a budget is created to guide activities during lease up
Maryland Multi Housing Association (MMHA): serves the multi-housing industry and communities in Maryland
National Apartment Association: a non-profit trade association of apartment communities, owners and suppliers
Net Operating Income (NOI): the total net revenue that remains after all operating expenses are deducted from total income
Offline Units: units unable to generate revenue, because they are unable to be leased – not due to vacancy
Operating Expenses (OE): includes all expenses, fixed and variable, incurred in the course of managing the property
Operating Expense Ratio: an expense to income ratio showing the percentage of effective gross income (EGI) needed for operating expenses
Other Income (OI): income from items other than rent – laundry, vending, parking, late fees, pet fees
Petty Cash Fund: a fund of available cash to handle one-time, minor expenses such as gas or incidental office supplies
Replacement Reserve (RR): an account used to set aside money for anticipated future expenses
Return on Investment (ROI): measures the rate of return based on a property’s income
Section 504 of the Rehabilitation Act: states that qualified individuals cannot be excluded from participation in, denied benefits of, or subjected to discrimination in federally subsidized housing
Total Rent Revenue: the amount of Gross Potential Rent (GPR) less vacancy, concession, collection loss and nonrevenue units plus other income
Vacancy: a unit or property that no one resides in
Vacancy, concession & collection loss (VAC): total value of rent loss from vacant units, concessions, collection losses, and non-revenue units
Write Off: a reduction of the recognized value of an asset or account