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Financial Management
CAM Financial Management
| Term | Definition |
|---|---|
| CAM impact property financials | PALEBV= Analyze income Minimize Financial Loss Manage Expenses Monitor Budgets Performance Measurement Property Valuation |
| Generate and control income | Rent Parking Cable, Internet Clubhouse rental Fees, late, pet Laundry vending |
| Control Expenses | Maintenance Advertising Taxes Utilities Insurance Salaries/ Personnel |
| GPR | Gross Potential Rent- Rent collected at 100% occupied and market rent |
| GPI | Gross Potential Income- occupied units at existing lease rate plus vacant at market |
| Income statement | all revenue and expenses current to budget and identifies variances |
| Cash flow or operating statement | amount of $ after income collected and expenses paid |
| VAC | vacancy loss due to concession, collection loss, nonrevenue units, vacant units |
| NRI or Total Rent Revenue | Net Rental Income GPR - VAC= TRR |
| OI | Other Income laundry, vending, parking, late fees, pet fees, |
| EGI | Effective Gross Income GPR - VAC + OI= EGI |
| OE | Operating Expenses expenses, fixed and variable |
| NOI | Net Operating Income GPR-VAC+OI=EGI- OE= NOI |
| OE ratio | Operating Expenses Ratio OE/EGI(GPR-VAC+OI)= OE ratio |
| CE | Capital Expenses non-recurring appliance replacement, reno, roof, add life to property |
| RR | Replacement Reserve $ set aside each month future expenses and large projects |
| DS | Debt Services mortgage/ loan (principal and interest) sometimes RR taxes insurance |
| Cash Flow | money remaining after income and expenses GPR-VAC+OI=EGI EGI-OE=NOI NOI-RR-CE-DS=CF |
| Break Even Occupancy | % needed to cover OE and DS |
| Break Even Rent per square foot | rent per sq ft pay OE+DS (OE+DS+RR)/TOTAL SQ FT=BREAK EVEN SQ FT |
| General Ledger | group of accounts offsetting debits and credits debits increase assets and decrease liabilities and equity |
| chart of accounts | sub accounts GL codes |
| Income Statement (Profit and Loss) | measures performance compares accounting to budget shows variances |
| Minimize financial loss | VAC Non-revenue units- employee units or down units Concessions and Discounts Bad Debt |
| Manage expenses | Fixed- non-controllable, taxes, depreciation, insurance Variable- vary w/ occupancy- electric Cap Ex Debt Service |
| Fixed rate loan | 20- 30 yrs same pay amortization- % to Int. % to Princ |
| Variable rate loan | ARM Adjustable Rate Mort. based on financial index- interest rate changes |
| Balloon | fixed rate for _ years must be paid in full after that date |
| Bullet | P & I paid in 1 lump sum at a specified time. New construction and rehab when no income. |
| value and cap rate ratio | NOI / Cap= Value NOI / value= Cap CAp x Value = NOI |
| Economic Occupancy Formula | TRR / GPR= % |
| Effective Market Rent | market rent x # months in lease- concessions / # months in lease |
| Leasing exposures | # vac + # of on notice - # preleased= total exposure in units total exposure in units / # of units= exposure % |
| Operating Expenses Ratio | OE / EGI - OE ratio % |
| Projected traffic required to meet leasing goals | total # of leases / avg. closing %= projected traffice required to meet leasing goals |
| Lease up budget | w/ out history projections- less precise pay attention to: activities & costs to attract residents, sign leases, generate income. absorption and timing of move ins and timing of expenses adjust forecasts but not budget |
| Rehab/ reno budget | larger CAp Ex and labor more flexible depending on subs and schedules and supplies may have 0 income month to years |
| operating budget | varying expenses- month to month detailed goals based on owners investment goals deadlines dictated by property management agreement |
| Managing budgets | 1. Analyze #'s 2. Analyze variances 3. Explain variances - % off and then affects on NOI 4. Recommend action |
| Annualization vs. extrapolation | Annualization- numbers and averages extrapolation- use numbers to make educated predictions |
| ROI | NOI / initial investment |
| cash on cash return | cash flow / initial investment |
| Property valuation approaches | cost approach- fuly replace sales comps- single fam income cap- NOI / cap rate= value |
| 4 attributes affecting value | supply and deman substitution- price to aquire similar highest and best use external influences- location |
Created by:
MelCrab
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