Knowledge and Understanding-

At MBREC, it's important to us that you understand how your investment will work and what markers you can follow to monitor your investments success. Because Real Estate Investment has a lingo all it's own, here is a section to help you talk the talk.

Investment Terminology:

These are terms you'll want to be familiar with as we may refer as they may apply your investment strategy:

• GOI: Gross Operating Income (All income)
• NOI: Net Operating Income (GOI-expenses, but not debt service)
• Debt Service: Principal and Interest payments on loans.
• Discount Rate: The rate you need to earn for the investment to be worth investing into. (Sometimes called the nominal rate)
• Pre-Tax: Before Income and Capital gains tax. (not property tax)
• After-Tax: After Income and Capital gains taxes have been factored.
• Present Value: Present Value of your investment.
• Future Value: Future Value of your investment.
• ROI: Return On Investment. Used to determine your all inclusive annual rate of return on your investment. Can be Pre-Tax or After-tax, varying according to the information we have on hand.
• ROR: Rate Of Return. Usually an annual percentage, but based on a certain time period.

• Capitalization Rate (Cap Rate): NOI /Price. Used to determine an after expense cash flow analysis of a property's performance. (Does not factor for Debt Service)
• GRM: Gross Rents Multiplier. A quick napkin test to compare gross rents to the price. Can be done on an annual or monthly percentage.
• Cash on Cash: Measures annualized cash flow as a percentage of the initial investment amount paid.
• NPV: Net Present Value- Used to derive the current value of your investment when compared to future values at your desired discount rate. Usually used when capital improvements or major changes are planned.
• IRR: Internal Rate of Return. Rate of return after factoring time value of cash flows and the discount rate. It also assumes the reinvestment of cash flows at the same discount rate.
• Value-Add: Monitors how much value can be added through increasing income or via capital improvement.
• Value Engineering: Assessing expenses and determining ways to consolidate, reduce or eliminate expenses to increase property cash flow and value.