GLOSSARY OF HOUSING TERMS
A/P Accounts Payable
An accounting term which represents a list of bills that are due, but that have not yet been paid.
A/R Accounts Receivable
An accounting term identifying amounts due to be paid into the property, but which have not yet been received.
The process of calculating what the annual cost of something will be, based upon the year-to-date actual numbers. There are several different approaches to annualizing numbers, vs. the commonly utilized method of just dividing by the year-to-date dollar amount by the number of months and multiplying by 12.
The portion of the Balance Sheet that represents what the property owns; i.e. monies in various property accounts, monies owed to the property and the value of the buildings and equipment associated with the property.
Amounts of money that are due to the property (generally unpaid rent or damages billed to a past resident), which have been determined to be “uncollectible”. Often these amounts are identified once per year at the end of the fiscal year.
represents the Assets of the property and the Liabilities of the property, as well as the difference between the two, and owner equity, as of any particular date.
Refers to the process of comparing the budgeted amount for any given period to what is actually occurring for that period, and identifying the variances.
An attachment to the budget submission that explains variances between the current year’s budget, anticipated year end, and next year’s budget. It may also include a list of any components in any particular line item of the budget.
Budget Variance Report
Another name for “Income Statement”.
Capital Improvements (also called Fixed Asset Improvements)
Property improvements that we want to budget that are “major”; i.e. generally those that are written off (depreciated or expensed) over a period of time, and that cost more than $500.
The process of reclassifying (transferring) an item to the Asset section of the Balance Sheet, which was originally booked (posted or written-off) as an expense.
CNA Capital Needs Assessment
A report representing the long term, usually 20 years or greater, projection of the physical needs of a property. It charts the effective remaining life of each item, and its replacement cost, and calculates the deposits to the replacement reserve account that are necessary to assure that there is enough money to replace the items when it is needed.
CO Certificate of Occupancy
The date given a property when construction has progressed far enough to allow for human habitation. Often becomes the PIS Placed in Service Date for Tax Credit Properties.
CA Contract Administrator
The agency which monitors the monies that are given to a property by a regulatory agency, as specified in the Regulatory Agreement. The contract administrator administers the funds and monitors compliance with regulations.
Tenant Payment plus Subsidy Payment; the foundation for calculating Gross Potential Rental Income
Debt Service (see P & I)
When the bottom line of a financial report or budget is “in the red”, i.e. a negative number.
A list of the people who owe the property money; a.k.a. Accounts Receivable.
The same as “Net Equity” and “Owner’s Equity”; i.e. the difference between Assets and Liabilities
Also known as “Reserve Accounts”. These accounts are to accumulate monies for some future purpose. The escrow accounts commonly utilized in housing are the Replacement Reserve Account and the Tax and Insurance Account.
What the property gives out, or pays, to outside vendors.
Fair Housing Act
Legislation first enacted in 1968 and expanded by amendments in 1974 and 1988, which provides HUD with investigation and enforcement responsibilities for fair housing practices. The laws prohibit discrimination in housing (and lending) based on race, color, religion, sex, national origin, handicap or familial status.
The obligation to conduct oneself faithfully and to exercise sound judgment, while pursuing the goals of maximizing returns and minimizing risks, for an asset under one’s management and responsibility.
Reports that summarize the impact of financial transactions that have occurred over any given period of time, and which show the current financial status.
The twelve month period of time upon which the property’s financial records are kept. It does not have to be the same as a calendar year.
organizations doing business for the primary purpose of generating a profit, i.e. a return on their investment.
GL General Ledger Codes
four digit numbers which every bookkeeper and accounting person uses to keep track of the categories to which they post items. They are listed on the Chart of Accounts in Appendix 1.
GPR Gross Potential Rental Income
The maximum amount of rental income that can be obtained in any given period, assuming that all the apartments are occupied and that all rental amounts are billed in full for the entire period.
HAP contract – Housing Assistance Payments
A written agreement between the owner of the property and the regulatory agency which specifies the amount of subsidy that will be paid to the property over a period of time.
revenue that the property receives from outside sources.
A report showing the Income that the property receives in relationship to the Expenses of the property and the difference between the two, which is Net Operating Income. It is sometimes called a “profit and loss” statement, or a “monthly report.” The report also shows the current month budget vs. actual performance, as well as year-to-date.
That portion of the debt/mortgage payment that is a fee for the privilege of borrowing the money; it is shown on the budget under “Expenses”.
what the property owes, i.e. unpaid obligations, the amount of security deposits owed back to the residents, and its mortgage.
MCA Maine Condominium Act
The governing law in Maine for all items related to Condominium Law and Management
The agreement between the owner and the manager, approved by the regulatory agency, which specifies the management fees to be paid the manager, and other terms of expectations and responsibilities
MCS Market Comparability Study/Analysis
A study that identifies and analyzes properties that are similar to those in a given area, to compare rent levels and arrive at a determination of the fair market rent.
A program administered by OMHAR designed to bring the rents of privately owned multifamily properties with federally insured mortgages in line with the rents of the applicable local market.
Monthly (Financial) Report
Another term to describe Income Statements; see “Income Statements”
Mortgage Insurance Premium
A special mortgage insurance that is required when HUD grants a mortgage to an entity that has not contributed at least 20% of the mortgage amount prior to closing.
a differential between the budgeted amount and the actual amount that is worse than what was expected (budgeted), and is unfavorable to the owner; i.e. when income is under budget or when an expense is over budget.
New Cash Position
The bottom line cash position on a budget; i.e. the number arrived at by taking the Net Operating Income, and subtracting the total outflows and adding the total inflows, (shown under the Other Cash Transactions section of the budget.)
the difference between Assets and Liabilities. Also called Owner Equity, and Retained Earnings.
NOI Net Operating Income
Income less Expenses.
NPR Net Potential Rent
Gross Potential Rent less Vacancy Loss.
Organizations whose goals are generally a result of a higher purpose or a “mission”, which was established when the organization was formed. They are usually governed by a Board of Directors. What ever profits or surplus cash are realized does not get distributed to the owners, as in a For-Profit organization, but are kept as an asset of the property.
NRB Non-Rent Bearing Unit
See “Rent Free Unit” can be Police Officer, Site Manager
A percentage relationship between the occupied units and the total units in a property.
Other Cash Transactions
Those monetary transactions that do not typically show up on an Income Statement because they are not, buy GAAP definition, Income or Expenses. They are, however, items that affect the cash position of the property, and should be represented on an operating budget.
Other Cash Transactions – Inflows
That part of Other Cash Transactions that represents monies flowing into (+) the operations account.
Other Cash Transactions – Outflows
That part of Other Cash Transactions that represents monies flowing out of (-) the operations account.
When actual income is more than budgeted income (a positive variance), or when actual expenses are more than budgeted (a negative variance).
The period it takes for you to recoup the initial investment costs, via increasing savings, of doing something that ultimately saves money.
PUPM Per unit per month
A method of comparing income and expenses to other properties
a differential between the budgeted amount and the actual amount that is better than what was expected (budgeted), and is favorable to the owner; i.e. when income is over budget or when an expense is under budget.
In the world of bookkeeping, when something is recorded on the financial records of a property, it is “posted.”
That portion of a loan/mortgage that pays back the original amount borrowed; budgeted under Other Cash Outflows.
Profit and Loss (P & L)
See “Income Statement”
Project Based Subsidy
When the subsidy, Section 8 for example, is given directly to the property. Sometimes called “deep subsidy”. The tenants only receive the subsidy if they continue to reside in that property; i.e. they can not transfer the subsidy to another property. The alternative to this is “shallow subsidy.”
The method of dividing up an expense between multiple properties; most common when discussing payroll expenses.
Housing Owned by HUD and Managed Locally by a Housing Authority. Governed by an ACOP (Admissions and Continued Occupancy Policy)
REAC – Real Estate Assessment Center
An organization created by HUD whose mission is to centralize the assessment of properties. This organization sets the standard for performance, and conducts an on-going program of property inspections, analysis of financial and management reports (including tenant income, and rent/subsidy calculations), resident surveys, and review of resident appraisals.
RA Reasonable Accommodation
An exception needed by a disabled applicant or tenant to allow them to attend or live as anyone else would a housing unit or common space.
A binding agreement between the Owner of a property and the Regulatory Agency that is granting funding or subsidy. It specifies the obligations, responsibilities and limitations of both parties.
RA Rental Assistance
provided by Rural Development’s MultiFamily Program
Rent-Free Unit (also known as Non-Rent Bearing or NRB)
An apartment which has been dedicated to a specific use, that does not generate any rent. The most common type of NRB unit is one given to a custodian or manager of the property and is also referred to as a concession.
RR Replacement Reserve (Escrow) Account
A restricted asset account that the owner makes deposits into on a monthly basis, to assure that adequate monies accumulate to cover major expenditures in future years. Withdrawals from this account are only permitted for “replacement” of physical plant items, and only with agency approvals.
Replacement Reserve Funding
Money that is taken from the operations account and deposited into the replacement reserve account, to cover major capital expenditures and replacements that will occur over a property’s lifetime.
Replacement Reserve Releases/Drawdowns
Money that is taken from the replacement reserve account and transferred back into (deposited into) the operations account, in order to pay the bills for capital expenditures and replacements that have occurred. The withdrawals from the reserve account must be allowed and approved by the regulatory agency.
RSC Resident Service Coordinators
A staff position, endorsed by HUD as a project expense, that provides support and resource coordination for residents seeking to become or remain self-sufficient.
Section 504 Self Evaluation and Transition Plan
This evaluation is an assessment of the property’s compliance with the Americans with Disabilities Act (ADA) and Section 504 of the Rehabilitation Act physical plant requirements. The transition plan identifies inadequacies, and the property’s plan for rectification.
A housing assistance payments program, authorized by the Housing and Community Development Act of 1974. Section 8 is a subsidy provided either to the tenant directly, via a certificate or voucher, or to a property (this is called project-based subsidy). Section 8 monies can be offered through a State or Local Housing Authority, or directly from HUD.
The amount which the tenant pays before moving into a unit, which is used to offset unpaid rent or damages.
Service Animal (Assistance Animal)
An animal required by an RA Reasonable Accommodation due to a disability
The dollar amount, determined by the CPA’s and the Regulatory Agency, that is left over after the property’s financial obligations are met for the past fiscal year. For-profit owners are able to have surplus cash distributed to them.
The difference between the tenant rent and the contract rent for the unit. Also called a “Housing Assistance Payment.”
LIHTC Low Income Housing Tax Credit Program
Also known as the Tax Credit Program. A way of obtaining financing to develop low-income housing. Government programs provide dollar-for-dollar credit toward taxes owed by the property owner. These tax credits can be sold, or used to back up bonds that are sold, to obtain financing to develop the housing.
T & I Tax and Insurance Account
An escrow account developed to save monies each month so that it is available to pay the tax and insurance bills when they arrive. Some financial institutions and regulatory agencies require the funding of such an account. Money is deposited (funded) and withdrawn (released) similar to the Replacement Reserve account.
Tenant Based Subsidy
Assistance from a Local, State or Federal Program that allows tenants to pay only a portion (i.e.30%) of their income toward the rent, with the program picking up the rest of the rent owed to Landlord.
Tenant Rent Payments
That portion of the Contract Rent that is paid by the tenant; the difference between the Contract Rent and the Subsidy Payment.
Turnaround Time (also called Make Ready)
The number of days it takes to make a unit ready for occupancy, upon a turnover.
The percent relationship between the number of units prepared for re-occupancy (i.e. move-outs) and the total units in a property.
The number of units in a property, multiplied by the number of days in a month results in the total unit days for that month. Useful when determining the Vacancy Rate or Vacancy Loss.
Sometimes called “Effective Life” or “Remaining Useful Life”; the period of time that a particular component of the physical plant is expected to last.
is the revenue that is lost as a result of units that are unoccupied.
is the percent relationship between the vacant units and the total units in a property.
The difference between the actual line item on a budget, and the amount which was originally budgeted. A variance may be Positive or Negative
Also known often as Section 8 or S8 voucher, but can be from Shalom House, a Housing Authority or other programs. It is a document guaranteeing an agency’s payment toward remaining rent after tenant has paid their portion.
The period of time beginning the first day of the current fiscal year and ending as of any specific day