LLoyd Jones | Glossary of Senior Living Terms

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Activities of Daily Living (ADLs)

This term refers to day-to-day skills that one needs to manage one’s basic physical needs such as bathing, eating, grooming, dressing, toileting, and functional mobility (moving from chair to bed, for example). Beyond the basic ADLs, instrumental ADLs are those skills related to the ability to live independently. These include activities such as managing finances and medications, transportation and shopping, food preparation, housekeeping, laundry, and the ability to manage phone and mail.


Aging-in-place is the concept of living in one’s own home throughout the aging process, regardless of the physical and/or mental decline that may occur. There are many in-home services today that make aging-in-place a possibility for seniors, such as home health care, in-home personal care, home-cleaning services, meal preparation, and money management.


The word “caregiver” refers to the person in charge of caring for another. This person is often a family member or designated healthcare professional. Almost sixty-six million caregivers, or twenty-nine percent of the U.S. adult population, provide care to someone who is ill, disabled, or aged.

Continuum of Care

A continuum of care refers to a comprehensive spectrum of health services across the various stages of aging. This model of healthcare is typically found in continuing care retirement communities (CCRC) that promise care even as a resident’s health needs increase.

Home Health Care

Home health care provides health services to patients in their own homes, whether a personal residence or an apartment within a senior community. Services can include physical and occupational therapy, speech/language therapy, and medical social services, even skilled nursing care. These services are provided by a variety of skilled health-care professionals. The services must be ordered by a physician and are usually covered by Medicare.

Hospice Care

Hospice is a holistic approach to providing comfort and care at the end of life rather than heroic life-saving measures. it is typically reserved for patients whose doctors have pronounced a maximum life expectancy of six months. Many people make up a hospice team, including doctors, social workers, nurses, spiritual advisors, and others. Hospice care can be provided either in a senior housing facility or in-home. In some cases, specialized hospice facilities or hospitals provide these services.

Independent Living (IL)

Independent living is a maintenance-free lifestyle for independent, active adults. An independent-living community typically offers meals, housekeeping, and abundant social opportunities. Amenities and activities promote continued health and well-being.

Certified Nursing Assistant

A certified nursing assistant (CNA) is trained to provide personal care to hospital patients and residents of senior housing facilities, especially nursing homes. Working under the direct supervision of a registered nurse or licensed practical nurse, a CNA assists patients/residents with bathing, dressing, toileting, and other activities of daily living. Training and licensing requirements vary from state to state.

Occupational Therapy (OT)

Occupational therapy is creative activity prescribed to patients to aid in recovery or rehabilitation from injury or illness. OT helps individuals relearn activities of daily living and is generally administered by a licensed therapist.

Registered Nurse (RN)

A registered nurse has passed a state board examination and is also licensed by a state agency to practice nursing. A minimum of two years of college is required in addition to passage of the state exams. The RN plans for resident care by assessing resident needs, developing and monitoring care plans in consultation with physicians, and executing highly technical, skilled-nursing treatments. There are many nursing specializations, such as critical-care nurses, operating- room nurses, cardiac nurses, nurse case managers.

Respite Care

Respite care is temporary relief from duties for caregivers, ranging from several hours to days. It may be provided in-home by volunteers or an agency hired to temporarily take over caregiving tasks or in a residential-care setting such as an assisted-living facility or nursing home that offers temporary accommodations. An occasional break from caregiving tasks is critical to the mental health of caregivers.

Per Resident Day (PRD)

Senior housing expenses can be assessed by calculating the per-resident-day costs of housing a resident. The calculation is especially useful in analyzing line-item costs such as raw food, nursing, and activities that can vary from month to month. PRD is calculated by starting with the total monthly expense amount, dividing it by the number of residents in the community during that period, and dividing it by the days in that month. The PRD is a key metric because it allows for a quick and convenient way to compare the operational expenses of different properties on a line-by-line basis.

Due Diligence

Due diligence is the research that an investor undertakes before finalizing the purchase of a real estate asset. Typically, in the purchase and sale agreement, the buyer and seller agree on a time frame for the buyer to complete his investigation. Buyers usually retain the right to renegotiate the purchase agreement based on their findings or even to terminate within a specified time period.

Earnest Money Deposit

Earnest money is a deposit made to the seller of a property to demonstrate the buyer’s “good faith” intention to purchase a property. This commitment gives the buyer time to order inspections and to perform due diligence. Depending on the terms of the contract, it may or may not be refundable.

Escrow Holder

The escrow holder is a third-party agent or entity that holds assets or funds in trust for buyers and sellers until all conditions of a contract have been met and the transaction is closed. The agent has a fiduciary responsibility to both parties.

Purchase and Sale Agreement (PSA)

The PSA is a legally binding document that establishes the terms and conditions related to a real estate transaction. It is the written contract between buyer and seller that stipulates the terms the parties have mutually agreed to including contingencies that must be met in order to close.

Real-Estate Owned (REO)

REO is a term used to describe real estate owned by a bank or lender following a foreclosure. REO properties can sometimes present a buying opportunity. Because banks typically don’t like to carry REO assets on their books, they may offer to sell them at below market value, just to cover the original loan amount. However, buyers should proceed with caution as REOs are usually sold “as is” without any warranties, so they can present some risk to the buyer.

Appraised Value

Appraised value is the evaluation of a property’s value calculated by a licensed real estate appraiser who is independent of the transaction. In most cases, banks are required by federal law to use certified appraisers to provide valuations as part of the bank underwriting process.

Capital Expenditures (CapEx)

Capital Expenditures (CapEx) are any new, major improvements made to an asset that increase its lifespan and value. CapEx also includes any equipment or supply costs needed to make the improvements. For tax purposes, capital expenditures cannot be classed as operating expenses so they cannot be deducted from income sources. Instead, they add to the owner’s basis which is the total amount paid for the asset. CapEx examples include replacing a property’s roof, building a parking lot, upgrading units, and anything that is not part of regular maintenance.

Capitalization Rate (CAP Rate)

Capitalization Rate is calculated by the net operating income (NOI) divided by the sale price or value of a property. This metric helps buyers determine their expected return on investment before factoring in mortgage financing. A low cap rate usually comes with lower risk. The cap rate is useful because it is calculated on a cash basis and assumes no leverage on the asset so it’s not subject to variable external influences such as interest rates and loan amounts.

Cash-on-Cash Return (CoC)

A cash-on-cash return is a ratio between an asset’s annual cash flow and the amount of cash an investor has invested in the property. This is generally calculated before taxes. CoC is a blunt evaluation metric used to determine the performance of commercial real estate and is most commonly used alongside other performance metrics including cap rate and internal rate of return. It is sometimes referred to as cash yield. CoC is calculated as follows: (gross scheduled rent + other income) – (vacancy + operating expenses + mortgage payments) _____________________________________________________________________________________________________ Total cash invested


A contingency is a condition set forth in a real estate purchase agreement that specifies actions or conditions that must be met before the transaction can close. Both the buyer and seller must agree to the terms of each contingency. In a commercial real estate transaction, typical contingencies include the buyer obtaining financing, a clear title, a property survey, satisfactory due diligence within a certain time frame. If the contingencies are not satisfied, the transaction can be terminated.

Debt-to-Equity Ratio (D/E)

Debt-to-Equity Ratio in real estate is a measure of ownership. It measures how much of the property an investor actually owns versus how much is owed on the mortgage.


Depreciation is the decrease (on paper) in the value of a property over time. The U.S. Tax Code deems that commercial properties have a “useful life” of 39 years. (Residential properties have a 27.5-year lifespan.) This allows owners of commercial properties to claim a depreciation of the property value every year in equal installments for 39 years. This reduction is applied against property income, thus reducing the owner’s tax burden. Depreciation does not affect the actual market value, which in many cases is appreciating. The IRS also offers a method of accelerating that depreciation via a process called “cost segregation” through which various components of a building are assigned an individual (shorter) lifespan.

Internal Rate of Return (IRR)

Internal Rate of Return is a measurement of a property’s long-term profitability potential. IRR considers the annual net cash flow and change in equity over time. It is used to make projections about the annual rate of growth of an investment. The IRR is useful in helping investors compare investment opportunities.

Loan to Cost

Loan-to-cost (LTC) compares the financing amount of a commercial real estate project to its cost. LTC is calculated as the loan amount divided by the total project cost. It helps real estate lenders evaluate the risk of offering a loan to a borrower, and it helps developers understand the amount of equity they will need to complete an acquisition or construction project.

Loan to Value

Loan-to-value (LTV) compares the loan amount to the expected market value of the asset. LTV is calculated as the loan amount divided by the purchase price or appraised value. Higher loan to value ratios can be a signal that the lending bank has high confidence in the underlying asset and ability of the sponsor to operate and manage it.

Bridge Loan

A bridge loan is short-term financing used until a person or company secures permanent financing or removes an existing obligation. Bridge loans are typically short term, between 1-3 years, and come at higher interest rates than permanent financing. In commercial real estate investing, a short-term bridge loan may be used to pay for improvements to a property that the investor expects to be able to pay back quickly due to the increased revenue they will generate.