Intermediate1.5 hours10 terms

Effective Yield: Key Investment Terms

This curated collection offers key terms that might be helpful when exploring effective yield in real estate investment. It's a reference guide to commonly referenced concepts, not a comprehensive course, designed to support your learning journey.

Term Collection

Net Operating Income

Net Operating Income (NOI) is a key real estate metric representing a property's annual income after deducting all operating expenses, but before accounting for debt service, income taxes, and capital expenditures.

Intermediate11-12 min

Cash-on-Cash Return

Cash-on-Cash Return (CoC) is a real estate investment metric that calculates the annual pre-tax cash flow generated by a property as a percentage of the total cash an investor has invested.

Intermediate15-18 min

Leverage

Leverage in real estate is the use of borrowed capital, typically through mortgages, to finance property purchases and amplify potential investment returns.

Intermediate15-18 min

Internal Rate of Return

The Internal Rate of Return (IRR) is a sophisticated financial metric used in capital budgeting to estimate the profitability of potential investments, representing the discount rate at which the net present value (NPV) of all cash flows from a particular project equals zero.

Advanced15-18 min

Discounted Cash Flow

Discounted Cash Flow (DCF) is a valuation method that estimates the intrinsic value of an investment by projecting its future cash flows and discounting them back to their present value.

Intermediate14-15 min

Capitalization Rate

The Capitalization Rate (Cap Rate) is a real estate valuation metric used to estimate the potential rate of return on an investment property, calculated by dividing its Net Operating Income (NOI) by its current market value.

Intermediate14-15 min

Gross Potential Income

Gross Potential Income (GPI) is the maximum possible revenue a rental property could generate if all units were fully occupied at market rent, including all other income sources, before accounting for expenses.

Beginner13-14 min

Operating Expenses

Operating expenses are the ongoing costs of running and maintaining a real estate investment property, excluding mortgage principal and interest payments, and capital expenditures.

Beginner13-14 min

Debt Service

Debt service is the total amount of principal and interest payments required to repay a loan over a specific period, typically for a mortgage or other property-related financing.

Beginner11-12 min

Effective Yield

Effective Yield represents the true annualized rate of return on a real estate investment, accounting for all fees, costs, and the compounding effect of income over the investment period.

Intermediate7-9 min