Glossary
The multifamily glossary, in plain English.
The terms owners and investors hear on every deal and every report, explained the way we would explain them across the table.
26 of 26 terms
A
C
- Cap RateCap rate is a property's net operating income divided by its price, shown as a percentage. It gives a quick read on yield before financing.
- Cash-on-Cash ReturnCash-on-cash return is a year's cash flow after loan payments divided by the cash you invested. It shows the yearly yield on your own money.
- ConcessionsConcessions are discounts that lower what a new resident pays, such as free rent, reduced deposits or waived fees, used to attract and lease up units.
D
- Debt Coverage Ratio (DCR)Debt coverage ratio compares a property's net operating income to its yearly loan payments. Lenders use it to see whether the property can carry its debt.
- DelinquencyDelinquency is rent or other charges that residents owe but have not paid by the due date. It cuts into the income a property actually collects.
E
- Economic OccupancyEconomic occupancy is the rent actually collected divided by gross potential rent. It shows how much of a property's income potential is being realized.
- Effective RentEffective rent is the average rent a resident actually pays over the lease after free rent and other concessions are spread across the term.
- Equity MultipleEquity multiple is the total cash an investor gets back divided by the cash invested. A 2.0x multiple means you doubled your money over the hold.
G
- Gross Potential RentGross potential rent is the most rent a property could collect if every unit were leased at its full asking rent all year.
- Gross Rent Multiplier (GRM)Gross rent multiplier is a property's price divided by its yearly gross rent. It is a fast, rough way to compare similar properties.
I
L
- Lease-UpLease-up is the period when a new or newly renovated property fills its units for the first time, from first move-in to stabilized occupancy.
- LeverageLeverage means using borrowed money to buy a property. It can raise returns when a property performs well and increase losses when it does not.
- Loss to LeaseLoss to lease is the gap between a unit's market rent and the rent in its current lease. It measures rent left on the table.
M
N
O
- Occupancy RateOccupancy rate is the share of a property's units that are occupied. It is occupied units divided by total units, shown as a percentage.
- Operating Expense RatioOperating expense ratio is a property's operating expenses divided by its effective gross income. It shows how much of each income dollar goes to costs.
P
R
- Rent RollA rent roll is a unit-by-unit list showing each resident, lease dates, rent amount, deposit and status. It is a snapshot of a property's income.
- Replacement ReservesReplacement reserves are money set aside each year for big, periodic repairs such as roofs, appliances and paving, so these costs do not hit all at once.
T
- T12 (Trailing 12 Months)A T12 is a property's actual income and expenses for the last twelve months, shown month by month. It is the main record of how a property really performed.
- TurnoverTurnover is how often residents move out and units must be re-leased. It is usually shown as the share of units that turn over in a year.
V
Y
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Questions
About the multifamily glossary
What is the multifamily glossary for?
The multifamily glossary explains the terms owners and investors see in deals, reports and leases, in plain English, so you can follow every conversation about your property.
What are the most important multifamily terms to know?
Start with net operating income, cap rate, effective rent, occupancy and concessions. Together they explain what a property earns and what it is worth.
What is the difference between asking rent and effective rent?
Asking rent is the advertised price. Effective rent is what residents actually pay after concessions, so it shows real pricing power.
How do owners use these terms with Next Level?
Our monthly reports use these same measures, so owners see exactly how rent, occupancy and expenses are moving.
Is a term missing?
Tell us through the contact page and we will add it.