​Accredited Investor

An individual or entity that meets income or net worth thresholds defined by the SEC, allowing them to invest in private offerings like 506(c) syndications. Typically, this means an individual earning $200,000+ ($300,000 with a spouse) or having a net worth over $1 million (excluding primary residence).

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Asset Management

The ongoing oversight and execution of a property's business plan after acquisition, including renovations, leasing, expense control, and reporting to investors.

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Capital Stack

The structure of capital used to finance a deal, typically including equity (from investors) and debt (from lenders). Senior debt is paid first, followed by preferred equity, then common equity.

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Cash-on-Cash Return

A measure of annual return based on the cash invested. For example, if you invest $100,000 and receive $8,000 annually, your cash-on-cash return is 8%.

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Cap Rate (Capitalization Rate)

A formula used to value income-producing real estate: Net Operating Income ÷ Purchase Price. Lower cap rates generally indicate higher property values.

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Distributions

The periodic cash payments made to investors, typically from property cash flow or proceeds from a sale or refinance.

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Due Diligence

The investigation and analysis performed before acquiring a property, including financial audits, inspections, market research, and legal review.

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Equity Multiple

A metric showing how much total return is generated on invested capital. An equity multiple of 2.0x means an investor received double their original investment over the hold period.

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General Partner (GP)

Also called the sponsor or operator, the GP is responsible for sourcing, acquiring, managing, and ultimately selling the property. They often invest alongside limited partners and receive a share of profits through fees and profit splits.

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IRR (Internal Rate of Return)

A metric that estimates the annualized rate of return, factoring in both cash flow and the time value of money. It's commonly used to evaluate the long-term profitability of real estate investments.

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Limited Partner (LP)

A passive investor who contributes capital to a syndication but does not participate in day-to-day management. LPs benefit from potential cash flow, appreciation, and tax advantages.

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Loan-to-Value (LTV)

A ratio comparing the loan amount to the property's appraised value. For example, a $7M loan on a $10M property is a 70% LTV.

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Net Operating Income (NOI)

The property’s income after all operating expenses (excluding mortgage payments). NOI is used to assess a property’s value and performance.

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Preferred Return (Pref)

A feature in many syndications where limited partners receive a set return (e.g., 7–8%) before profits are split with the general partner.

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Private Placement Memorandum (PPM)

A legal document that discloses all material facts about the investment, including risks, structure, and expected returns. Required for SEC compliance in private offerings.

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Syndication

A partnership structure where multiple investors pool funds to purchase real estate. The GP manages the deal; LPs invest capital and share in profits.

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Value-Add Strategy

A real estate investment approach that aims to increase property value through renovations, rent increases, or operational improvements.

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506(c) Offering

A regulation under the SEC’s Regulation D that allows sponsors to publicly market investment opportunities but limits participation to verified accredited investors.