Assessment Ratio: Equals the Assessed Value divided by Market Value.
Assessed Value: Equals Market Value multiplied by Assessment Ratio.
Cap Rate: Short for "capitalization rate" and equals the Net Operating Income (NOI) divided by Purchase Price.
Cap Ex: Short for "capital expenditures" and refers to major expenditures that provide long-term improvements to the physical quality of the property required to maintain or add value to the property.
Discounted Cash Flow (DCF) Analysis: A method used to find the present value of future cash flows or to measure the Internal Rate of Return (IRR).
Discount Rate: Equals the opportunity cost of capital or the return expectations for an investment.
Effective tax rate: Equals Actual Taxes divided by Market Value. It also equals Assessment Ratio multiplied by Tax Rate.
Going-in Cap Rate: Cap Rate at the time of purchase.
Going-out Cap Rate: Cap Rate at the time of sale, also known as the reversion or terminal cap rate.
Loaded cap rate: Equals Cap Rate plus Effective Tax Rate.
Market Value: The price at which a property can be sold on the open market.
Mill Rate: The the amount of tax payable per dollar of the assessed value of a property. The mill rate is equal to one-tenth of a cent or $0.001.
Net Operating Income (NOI): Equals all sources of revenue minus operating expenses.
Property taxes: Equals Assessed Value multiplied by Tax Rate.
Tax rate: Equals Mill Rate divided by 1,000.