Intermediate terms

Rental Market Pulse: Key Terms for Investors

This collection offers a curated selection of key terms essential for understanding the national rental market. It focuses on concepts that might be helpful for investors tracking property cash flow and profitability. Use this as a quick reference to clarify commonly encountered terminology.

Learning Path

Rent Growth

Rent growth is the percentage increase in rental rates for a property or market over a specific period, directly impacting an investment's cash flow and valuation.

Intermediate4-6 min

Cash Flow

Cash flow in real estate investing represents the net income generated by a property after all operating expenses and debt service payments have been made. Positive cash flow indicates profitability, while negative cash flow suggests a loss.

Intermediate2-3 min

Multifamily Construction

Multifamily construction involves the development and building of residential properties designed to house multiple families or tenants, such as apartment complexes, condominiums, or townhouses, often for investment purposes.

Intermediate5-6 min

Vacancy Rate

The vacancy rate is the percentage of all available rental units in a property or market that are currently unoccupied or not generating income, serving as a key indicator of a property's financial health and market demand.

Beginner13-14 min

Comparative Market Analysis

A Comparative Market Analysis (CMA) is an informal estimate of a property's value based on recently sold, active, and expired listings in the same area, used by real estate professionals to help buyers and sellers determine a competitive price.

Intermediate15-18 min

Fair Market Rent

Fair Market Rent (FMR) is an estimate of what a rental property would lease for on the open market, including utilities, as determined annually by the U.S. Department of Housing and Urban Development (HUD) for various housing programs.

Intermediate13-14 min

Rental Supply

Rental supply refers to the total number of available residential or commercial properties for rent within a specific market at a given time, influencing rental rates and vacancy rates.

Intermediate5 min

Rent-to-Income Ratio

The Rent-to-Income Ratio (RTI) is a financial metric used by landlords and lenders to assess a tenant's ability to afford rent, calculated by dividing gross monthly rent by gross monthly income.

Intermediate5-6 min

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

Multi-Family Property

A multi-family property is a residential building containing two or more separate dwelling units, offering investors multiple income streams from different tenants.

Beginner11-12 min

Rental Market

The rental market refers to the supply and demand for rental properties in a specific geographic area, influencing rent prices, vacancy rates, and investment opportunities for landlords.

Beginner5 min

Absorption Rate

The absorption rate measures the pace at which available properties are sold or leased in a specific market over a given period, indicating the balance between supply and demand.

Intermediate13-14 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