Chapter 19 Finance 3351 Real Estate

After-tax equity reversion (ATER) The before-tax equity reversion, defined as net selling price minus the remaining mortgage balance, at the time of sale less taxes due on sale.
Before-tax cash flow Annual net operating income less annual debt service.
leverage The use of mortgage debt to help finance a capital investment.
levered cash flow The property’s net rental income after subtracting any payments due the lender.
unlevered cash flow The expected stream of NOIs and the expected net sale proceeds (NSP). This represents the income-producing ability of the property before subtracting the portion of the cash flows that must be paid to the lender to service or retire the debt.
Before-tax equity reversion The net sale proceeds less the outstanding balance on the mortgage loan.

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