Rental property terms, in plain words.
- Arrears
- Rent that is past due and unpaid.
- Cap rate
- Net operating income divided by property value. A quick way to compare the income return of properties regardless of financing. Try the cap rate calculator.
- Capital call
- A request to co-owners to contribute money for a large expense, split by each owner's stake.
- Capital cost allowance (CCA)
- The CRA's system for deducting the cost of depreciable property, like buildings and equipment, over several years instead of all at once.
- Capital expense
- Spending that improves a property beyond its original condition or extends its life, such as a new roof. Generally depreciated through CCA rather than deducted in the year it's spent.
- Cash-on-cash return
- Annual pre-tax cash flow divided by the cash you invested (down payment plus closing and renovation costs).
- Current expense
- A recurring cost that keeps a property in its existing condition, like repairs, utilities or insurance, generally deductible in the year it's incurred.
- Debt service coverage ratio (DSCR)
- Net operating income divided by annual mortgage payments. Lenders often look for 1.2 or higher on rental properties.
- Gross potential rent
- The rent a property would earn if every unit were rented at its current or market rent all year.
- iCal
- A standard calendar format. Airbnb, Vrbo and Booking.com each publish a calendar link per listing that other systems can read to block booked dates.
- Largest-remainder rounding
- A way to split an amount so the shares always add up exactly: round everyone down, then give the leftover cents to the largest fractions.
- Loss to vacancy
- Rent not earned because a unit was empty.
- Management agreement
- The contract between owners and a property manager, setting fees, responsibilities and spending authority.
- Net operating income (NOI)
- Rental income minus operating expenses, before mortgage payments and income tax.
- Ownership entity
- The legal owner of a property: an individual, a partnership, a trust or a corporation.
- Pre-authorized debit (PAD)
- A payment the payer authorizes in advance to be withdrawn from their bank account on a schedule, governed in Canada by Payments Canada rules.
- Rent roll
- A list of every unit with its tenant, rent, lease dates, deposit and vacancy, as of a specific date. Lenders ask for it at financing and renewal.
- Rent supplement
- A government program that pays part of a tenant's rent directly to the landlord. It can be attached to a unit or to a tenant.
- Row-level security (RLS)
- A database feature that decides, row by row, which records each user is allowed to read or change.
- Security deposit
- Money a tenant pays at the start of a tenancy to cover unpaid rent or damage. Limits and who holds it vary by province.
- Semi-annual compounding
- Interest calculated twice a year. Canadian fixed-rate mortgages are conventionally compounded this way, which makes payments slightly lower than monthly compounding at the same stated rate.
- T776
- The CRA form, Statement of Real Estate Rentals, used to report rental income and expenses on a personal tax return.
- Turnover
- The work between one tenant or guest leaving and the next arriving: cleaning, repairs, inspection.
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