The knowledge base

Budget variance is the difference between a property's budgeted amount and its actual result for a line item or period, expressed in dollars or as a percentage of budget.

A cap rate (capitalization rate) is a property's net operating income divided by its market value, expressed as a percentage that represents the return an all-cash buyer would earn in the first year.

CapEx versus OpEx is the accounting distinction between capital expenditures, which buy or extend long-lived assets such as roofs and HVAC systems, and operating expenses, which cover the recurring day-to-day costs of running a property.

Centralized purchasing is a procurement model in which buying decisions for multiple properties are routed through a single team or system rather than made independently at each site.

Contract pricing is a negotiated agreement that fixes the prices a supplier will charge a buyer for specified items over a set period, replacing list prices with committed rates.

Controllable expenses are the operating costs a property's management team can directly influence through its decisions — such as repairs and maintenance, payroll, supplies, and contract services — as distinct from taxes, insurance, and utilities that are largely set by outside parties.

Cost per unit is a property's total spend in a category divided by its number of apartment units, the standard normalization multifamily operators use to compare expenses across properties of different sizes.

Effective gross income (EGI) is a property's gross potential rent minus vacancy, concessions, and credit losses, plus other income such as fees, parking, and utility reimbursements — the revenue the property actually collects.

Expense benchmarking is the practice of comparing a property's operating costs — usually normalized per unit — against industry surveys, portfolio peers, or its own history to identify categories where spending runs above the norm.

A GL code (general ledger code) is the numbered account in a property's chart of accounts to which every transaction posts, determining how income and expenses roll up into budgets, variance reports, and financial statements.

A group purchasing organization (GPO) is an entity that pools the purchasing volume of many member companies to negotiate discounted supplier contracts that no single member could win alone.

An invoice line item is a single row on a vendor invoice recording one product or service with its quantity and price — the smallest unit at which a property's spending can be verified.

Landed cost is the complete cost of a purchased item once freight, taxes, fees, and delivery charges are added to its quoted price — the only figure that fairly compares two suppliers.

Line-item pricing is the practice of evaluating each individual product or service on an invoice against its market price, rather than judging spending by invoice totals or budget categories.

A make-ready cost is the total labor and materials spend required to prepare a vacant apartment unit for its next resident, typically covering cleaning, painting, flooring, repairs, and replacement parts.

Maverick spend is purchasing that happens outside a company's approved suppliers, negotiated contracts, or standard buying procedures, typically at higher prices than the organization has already negotiated.

MRO (maintenance, repair, and operations) is the category of purchased goods — parts, supplies, and tools — consumed in keeping a property running, as distinct from materials capitalized into construction or capital projects.

Multifamily procurement is the process of sourcing, purchasing, and paying for the goods and services an apartment property needs to operate, from HVAC parts and cleaning supplies to landscaping and unit-turn contracts.

Net operating income (NOI) is a rental property's effective gross income minus its operating expenses, calculated before debt service, capital expenditures, income taxes, and depreciation.

The operating expense ratio (OER) is a property's total operating expenses divided by its effective gross income, showing what share of each collected dollar operations consume.

Price drift is the gradual, often unnoticed increase in the prices a vendor charges a property for the same items or services over time, compounding across invoices until spend runs well above market.

Price verification is the process of confirming what an item should cost by checking the price paid against the current price of the exact same item from a real, available supplier.

A purchase order (PO) is a document a buyer issues to a supplier before a purchase, specifying the items, quantities, and prices agreed to, and creating the record an invoice is later checked against.

Repairs and maintenance (R&M) is the operating expense category covering the labor, parts, supplies, and service contracts required to keep a property and its units in working condition.

A SKU (stock keeping unit) is the unique identifier a supplier assigns to one specific product in one specific configuration, making it the only reliable unit for comparing prices between suppliers.

Spend analysis is the discipline of collecting, cleaning, and categorizing an organization's purchasing data to show what it buys, from which suppliers, and at what prices.

Unit turnover is the process and total cost of transitioning an apartment from a departing resident to a new one, including make-ready work, marketing, concessions, and rent lost during vacancy.

Verified savings are cost reductions confirmed item by item against real, currently available supplier prices for the same product, as opposed to savings estimated from averages, benchmarks, or projections.