Here's a glossary of terms that an investor should be familiar with when working with

multi-family real estate:

1. Cap Rate (Capitalization Rate): A measure of a property's potential return on

investment, calculated by dividing its net operating income by its current market
value or acquisition cost.
2. Cash Flow: The amount of money generated by a multi-family property after
deducting all expenses, including mortgage payments, property management,
and maintenance costs.
3. NOI (Net Operating Income): The income generated by a property after
subtracting all operating expenses but before accounting for financing costs (e.g.,
mortgage interest).
4. GRM (Gross Rent Multiplier): A ratio used to assess the potential value of a
property by dividing the property's price by its gross rental income.
5. Vacancy Rate: The percentage of rental units in a multi-family property that are
unoccupied at a given time.
6. Operating Expenses: The costs associated with maintaining and operating a
multi-family property, including property taxes, insurance, utilities, maintenance,
and property management fees.
7. Amortization: The gradual repayment of a loan principal over time, typically
associated with mortgage loans.
8. LTV (Loan-to-Value Ratio): The ratio of the loan amount to the property's
appraised value or purchase price. It's used by lenders to assess risk.
9. Debt Service: The amount of money required to cover the principal and interest
payments on a mortgage or loan.
10. Cash-on-Cash Return: A measure of a property's annual cash flow compared to
the initial investment, expressed as a percentage.
11. ROI (Return on Investment): The overall return earned on an investment, taking
into account all gains and losses.
12. Appreciation: The increase in the value of a property over time due to various
factors, including market trends and property improvements.
13. Due Diligence: The process of thoroughly researching and inspecting a multi-
family property before purchasing it, including financial analysis, inspections, and
legal reviews.
14. Property Management: The ongoing management of a multi-family property,
including tenant selection, rent collection, and maintenance.
15. Tenant Turnover: The rate at which tenants move in and out of rental units
within a multi-family property, which can impact cash flow and expenses.
16. Market Analysis: An evaluation of the local real estate market to determine
demand, rent rates, and potential competition for multi-family properties.
 17. 1031 Exchange: A tax-deferred exchange that allows investors to sell one
property and reinvest the proceeds in another property, deferring capital gains
taxes.
18. Depreciation: A tax benefit that allows property owners to deduct a portion of
the property's value from their taxable income each year.
19. Rental Agreement/Lease: A legally binding contract between a landlord and
tenant that outlines the terms and conditions of renting a unit within a multi-
family property.
20. Exit Strategy: A plan outlining how an investor intends to sell or dispose of a
multi-family property in the future, potentially realizing a profit.
21. Cash Reserve: A fund set aside to cover unexpected expenses, such as repairs or
vacancies, to ensure the property remains financially stable.
22. Rent Roll: A document that lists all current tenants, their rental rates, lease terms,
and any outstanding balances.
23. Concessions: Incentives offered to tenants, such as reduced rent or move-in
specials, to attract or retain them.
24. Property Appreciation: The increase in the value of a multi-family property over
time, which can result from both market forces and property improvements.
25. Market Rent: The average rental rate for similar properties in the local real estate
market, used to assess a property's rental income potential.

Understanding these terms is crucial for investors looking to make informed decisions in
the multi-family real estate market. It's important to consult with real estate
professionals and conduct thorough research before making investment choices.