Frequently

Asked Questions

Market Rent

The market rent refers to the market value of a rental unit for lease based upon comparable rental rates for similar units in close proximity to the subject. Used to calculate value, cash flow, and potential loan amounts.

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Limited Partner

In contrast to the general partner, a limited partner’s liability is limited to the extent of their share of ownership. In typical real estate syndication, a limited partner is a passive investor who puts in the capital.

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Internal Rate of Return

The IRR is calculated based on all future anticipated cash flow, principal pay down of debt, and proceeds on the exit of a property.

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Holding Period

The holding period is the amount of time the sponsor plans to hold the property.

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Exit Strategy

This is how the syndicator plans to cash investors out of their investment in the future. This may be by selling the property, purchasing their shares, or refinancing them out.

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Distributions

These are the funds paid out to investors. These profits may be paid monthly or quarterly or upon a successful exit.

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Cash Flow

Remaining liquid profit after deducting operating expenses and any debt service payments.

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Capitalization Rate

The cap rate. Calculated by dividing net operating income by the current market value of a property to determine an expected rate of return.

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Active Investing

This is the opposite of passive investing. An active investor does all the work of finding, structuring, managing, and exiting investments.

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Acquisition Fee

Compensation earned by the general partner in a syndication for sourcing, screening, arranging to finance, and closing on an investment asset.

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What is an Accredited Investor?

An accredited investor is an individual who qualifies to invest in real estate syndications by satisfying one of the requirements for of an annual income of $200,000—or $300,000 for joint income—or a net worth of at least $1 million (not including primary residence).

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