Intermediate54 minutes14 terms

backflush costing in real estate investment Key Terms Reference

Key backflush costing in real estate investment terms that might be helpful when exploring real estate investment concepts. This curated collection includes commonly referenced terminology to help with understanding industry concepts.

Term Collection

Development Budget

A development budget is a detailed financial plan outlining all anticipated costs for a real estate project, from land acquisition and construction to financing and project completion, serving as a critical tool for feasibility, funding, and cost control.

Intermediate12-15 min

Cost Estimation

Cost estimation in real estate is the process of forecasting the expenses required to acquire, develop, renovate, or operate a property, crucial for financial planning and investment analysis.

Intermediate5-6 min

Construction Costs

Construction costs encompass all expenses incurred during the building or renovation of a real estate project, including materials, labor, permits, and professional fees. These costs are critical for determining project feasibility and profitability.

Intermediate5-6 min

Inventory Valuation

Inventory valuation in real estate is the process of assigning a monetary value to properties held for sale or development, crucial for financial reporting and investment analysis.

Intermediate4-6 min

Cost Accounting

Cost accounting is a managerial accounting process that tracks, analyzes, and reports the costs associated with real estate projects or properties, providing crucial insights for budgeting, pricing, and profitability analysis.

Intermediate5-6 min

Work-in-Process (WIP)

Work-in-Process (WIP) in real estate refers to the value of a property undergoing development, renovation, or construction, including all accumulated costs until completion. It represents an asset on the balance sheet for projects not yet ready for sale or use.

Intermediate4-5 min

Accrual Basis Accounting

Accrual basis accounting records revenues when they are earned and expenses when they are incurred, regardless of when cash actually changes hands. This method provides a more accurate picture of a business's financial performance over time.

Beginner5 min

Lean Construction

Lean Construction is a project delivery methodology that focuses on maximizing value and minimizing waste throughout the entire real estate development process, from design to occupancy. It applies lean manufacturing principles to construction to enhance efficiency, reduce costs, and improve project outcomes.

Intermediate5 min

Cost Allocation

Cost allocation is the process of identifying, accumulating, and assigning costs to specific cost objects, such as properties, projects, or departments, to accurately measure profitability and inform financial decisions.

Intermediate5 min

Backflush Costing

Backflush costing is an accounting method that delays the recording of costs until the production or completion of a real estate development project, simplifying the accounting process by eliminating detailed tracking of work-in-process inventory.

Advanced8 min

Adjusted Basis

The adjusted basis is the original cost of an asset, such as real estate, plus the cost of any capital improvements, minus any depreciation deductions and certain other adjustments. It's crucial for calculating taxable gains or losses upon sale.

Intermediate13-14 min

Cost Accumulation

Cost accumulation is the systematic process of identifying, tracking, and categorizing all expenses associated with a real estate investment project to determine its total actual cost.

Intermediate2-3 min

Cost Control

Cost control is the strategic process of planning, monitoring, and managing expenses to optimize profitability and achieve financial objectives in real estate investments.

Intermediate5-6 min

Capitalization of Costs

Capitalization of costs is an accounting method where certain expenditures, typically for significant property improvements, are recorded as assets on the balance sheet rather than immediate expenses, allowing them to be depreciated over their useful life.

Intermediate5-6 min