phantom rent

Definition

The theoretical rental income from a vacant unit that's factored into pro forma projections but not actually being collected. It's the imaginary money that makes cap rates look better on paper than they are in reality.

Example Usage

The seller's financials include phantom rent on two units that haven't had paying tenants in six months—creative accounting at its finest.

Origin

Commercial real estate underwriting terminology

Fun Fact

Sophisticated buyers always scrub phantom rent from seller-provided financials, replacing it with realistic vacancy assumptions—because banks don't accept 'potential income' as mortgage payments.

Source: Commercial real estate investment and underwriting terminology

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Assessed Value

The government's opinion of what your property is worth, used exclusively to calculate how much tax you owe. It's magically always high enough to maximize your tax bill but too low to impress your neighbors.

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