Absorption Rate
Absorption Rate in real estate investing scenario is the rate at which available properties are sold in a given time phase. It is calculated by dividing the number of properties sold in a given time, by the total number of available properties. Read MoreView Less
Accredited Investor
Accredited investors are individuals qualified to invest in apartment syndications by having annual income of $200k, or $300k for joint income, or a net worth of $1M (not including the primary residence). Read MoreView Less
ACH Payment
Automated Clearing House (ACH) uses its network for bank to bank electronic money transfer in the USA. Users can transfer money from their bank account to any other bank account using ACH Payment facility. Read MoreView Less
ACH Return Code
If ACH is unable to collect funds from the customer’s account, a three character code is given as a result, which briefs about the reason for return. This code is known as ACH Return Code. Read MoreView Less
Acquisition Fee
Form of compensation earned by the general partner in a syndication in exchange for sourcing, vetting, securing financing and closing on a new investment asset. Read MoreView Less
Active investing
An investing backed by active participation of the investor in the venture. Active investing may include sourcing of the opportunity, management of funds, and administrative work to manage the asset invested in. Read MoreView Less
Active Investment
The opposite of passive investing. An active investor does all the work of sourcing, structuring, managing and exiting investments. Read MoreView Less
Amortization
The schedule of monthly mortgage (re)payment is called as Amortization. Usually, a reducing interest is charged, and on regular payments, more amount goes into the principals. Read MoreView Less
Apartment Syndication
Pooling resources from numerous passive investors through a sponsor to acquire, execute, and resale an apartment building. Read MoreView Less
App Integration
Making independently designed applications work together in one interface, by accessing data and functionality. Read MoreView Less
Appraisal
Appraisal is a valuation of a property estimated by an authorized person. It is estimated for taxation, insurance purposes and to determine possible selling price of a property. Read MoreView Less
Appreciation
Increase in the value of a property as per time. Read MoreView Less
Asset Management Fee
A recurring fee paid from property revenues to the general partner for asset management. Read MoreView Less
Assumption fee
A fee charged on a buyer for taking over a mortgage from the seller of the property. The buyer agrees to make monthly payments for the assumed mortgage. Read MoreView Less
B
Bad Debt
The loan amounts that are clearly determined as not collectible at present and in future. Read MoreView Less
Breakeven Occupancy
The occupancy rate required to bear all the expenses of a multifamily real estate property. It is the ratio of the sum of operating expenses and debt service and the gross potential income (through rents, parking fees, etc.) Read MoreView Less
Bridge Loans
Short term investor loans to leverage equity in one property to fund another or access equity as cash for a down payment on a new acquisition. Read MoreView Less
C
Cap Rate
The capitalization rate is calculated by dividing net operating income by the current market value of a property in order to determine a forecasted rate of return. Read MoreView Less
Capital
The money invested to fund a real estate venture (equity/debt), including property acquisition, formation of the company, and other expenses. Read MoreView Less
Capital Expenditure
Capital expenditures are funds used by the management company or active partners to acquire, improve or maintain a property. Often referred to as ‘CapEx’. Specifically applied to funds improve the useful life of a property. Read MoreView Less
Cash Flow
Cash profit left after deducting operating expenses and any debt service payments. Read MoreView Less
Cash-on-Cash Return
COC returns are the rate of return calculated by dividing cash flow being produced by a property by the upfront cash investment. Read MoreView Less
Check Payment
An instrument issued by the payer against the deposited funds to pay the recipient a specific amount on demand. Read MoreView Less
Closing Costs
Any costs required to close on a real estate or refinancing transaction. Can include origination, application, processing, underwriting, appraisal, and recording fees, as well as impounds for taxes and insurance. Read MoreView Less
Concessions
Incentives offered by the seller to the buyer of a property to close the deal faster. This may be reduced final price, repair cost, or personal possessions like furnishing. Read MoreView Less
Contract
A legally binding agreement that guides a real estate transaction. Read MoreView Less
Cosponsor Module
Unlike other syndication platforms in the market, SyndicationPro offers Co-Sponsor Module through which you can invite fellow sponsors and take down deals faster than before. Transform your business to quickly scale your acquisition portfolio confidently. Read MoreView Less
Cost Approach
Property valuation method that assumes that the buyer should pay the price of constructing an equivalen building. Read MoreView Less
Cost Segregation
The the process of identifying costs and assets, and their classification for tax purposes. Applied to reducing current tax liability and deferring taxes. Read MoreView Less
CRM
Customer Relationship Management if the technology to manage all communications with existing and potential customers/clients of a business. Read MoreView Less
Crowdfunding
The process of collecting funds/investments from multiple investors, by connecting them through social media and other online channels. Read MoreView Less
D
Deals
An agreement entered into two or more parties regarding the transfer of ownership or other kind of real estate transaction Read MoreView Less
Debt Investing
Debt investment is the investment in debt obligations. Like a mortgage loan. Debt investors normally earn interest until the time the debt is fully repaid. These investments sometimes provide an option to convert to an equity position. Read MoreView Less
Debt Service
Loan payments required to be paid back to a lender as considering debt service. Often used to calculate the DSCR for commercial real estate financing, and in evaluating investment returns. Read MoreView Less
Debt Service Coverage Ratio (DSCR)
The Debt Service Coverage Ratio is the figure commercial mortgage lenders use to underwrite and qualify a property for financing. DSCR measures the cash flow that will be available to cover debt service after other operating expenses. A DSCR ratio of 1 means the cash flow should cover the debt payments. Lenders normally require a minimum DSCR of 1.2. A better ratio may qualify the borrower for better terms. Read MoreView Less
Defeasance
Defeasance is a clause or condition in the sale deed or contract. If the condition is fulfilled, the contract or deed will be null or void. In another context, defeasance is a method to reduce the fees, when the borrower urges to prepay a fixed rate commercial real estate loan. The repayment may be in cash, or in the form of another cash-flowing asset for the original collateral for the loan. Read MoreView Less
Depreciation
Depreciation is the decline in the value of a real estate asset over time. Practically, the value of a real estate investment gains appreciation over time, bringing better equity for the owner. However, the value of the asset or building reduces gradually due to structural parameters. This decrease in value is called depreciation. Read MoreView Less
Digital PPM
Private Placement Memorandum is an offer document provided by a private company that comprises the details and disclosures for their private real estate offering. The private real estate is referred to as a Special Purpose Vehicle, which may be an LLC or LP. The investment is backed by the assets and investments owned by the SPV. Read MoreView Less
Distressed Property
Distressed Property is a property that is in pre-foreclosure or foreclosure due to the owner’s failure in mortgage payments or property tax bills. Distressed Property also refers to the properties under the control of a bank or lender. Read MoreView Less
Distributions
The funds paid out to investors. These profits can be paid monthly, quarterly, or on a successful exit event. Read MoreView Less
Distributions Calculator
A digital tool used to calculate the profit shares, capital gains, and other financial benefits for the investors in a real estate syndication or even in an REIT. Read MoreView Less
Document Management
Document Management is the process of searching and retrieving the required real estate deal-related and other crucial documents from a central storage location. Document Management System helps investors get the precise document whenever they need, through their browser-enabled devices. Read MoreView Less
Due Diligence
Due diligence is a group of tasks and processes for screening and evaluating the property to satisfy lender underwriting requirements. Can include appraisals, surveys, inspections, and title work. Read MoreView Less
E
Earnest Money Deposit
Earnest money is placed into escrow by the buyer of an apartment building as a deposit to show their commitment to execute on the purchase contract. EM is credited toward the purchase at closing. Read MoreView Less
Economic Occupancy Rate
Economic Occupancy Rate is the proportion of the gross potential rental income of a property to the actual money earned by a business. Read MoreView Less
Effective Gross Income
EGI is the effective income calculated by subtracting any losses due to vacancy, lease concessions, employees, model units, and bad debt. Read MoreView Less
Employee Unit
A residential unit allotted to an employee on a subsidized or discounted rent or for free of cost, is called as Employee Unit. Read MoreView Less
Equity Investment
The amount of cash put into an investment. In apartment building syndications this capital can be used toward the down payment, closing costs, borrowing costs, funding an operating account, and compensation earned by the general partners. Read MoreView Less
Equity Multiple
EM is a method to calculate a rate of return on commercial investment properties. It is calculated by dividing total cash distributions (cash flow and cash on exit) by the equity investment made. Read MoreView Less
Equity Under Management (EUM)
Equity Under Management refers to the total amount of Equity purchased by the end-user investors out of the currently active investment vehicles by a real estate syndication. Read MoreView Less
eSign
An electronic signature made through any device, like a desktop, laptop, tab, or smartphone, using the eSign app. This has become a swift and easy way to sign important documents today. Read MoreView Less
Exit Strategy
How the syndication plans to cash investors out of their stake in the future. This may be through selling the property, purchasing their shares, or refinancing them out. Read MoreView Less
F
Financing Fees
Financing Fees are the total amount paid by the borrower throughout the life of a mortgage. This includes the processing charges for the mortgage and the interest paid till the last installment. Read MoreView Less
Floating Rate
A floating interest rate is the same as an adjustable or variable or interest rate loan (ARM). The rate of interest charged, and payments can float and fluctuate with the market. Read MoreView Less
Fundraising
Fundraising is a process of seeking and gathering financial contributions from investing individuals or businesses to complete a real estate project or to acquire a real estate property. Read MoreView Less
Fundraising Automation
Fundraising Automation is a process of setting up an automated mechanism to take a potential investor through the sales funnel, based on his behavior, communication, and other parameters. In another context, allowing investors to invest their contribution swiftly through electronic payment modes is fundraising automation. Read MoreView Less
Fundraising Workflow
Fundraising Workflow refers to the procedure to convert a potential investor into an actual investor. A syndicator pitches the project idea, convinces the potential investor, gets a token as a soft commitment, and finally the investor deposits the mutually agreed amount. Read MoreView Less
G
General Partner
A General Partner usually owns the business partially and takes care of the routine administration of the business. General Partner gets a predetermined profit-share. Read MoreView Less
Gross Potential Income
Potential income that a multifamily property could produce with no vacancies and all leases signed at market rates. Plus all other revenue. Read MoreView Less
Gross Potential Rent
A hypothetical amount of revenue if a apartment community was leased at 100% occupancy year-round at market rental rates. Aka ‘GPR’. Read MoreView Less
Gross Rent Multiplier
A calculation showing the number of years it would take for a property to pay for itself based upon the gross potential rent. Calculated by dividing the property purchase price by annual gross potential rent. Read MoreView Less
Guaranty Fee
Guarantee Fee is a sum paid to the issuer of a mortgage-backed security, which reduces the risk for loss in the case of defaults. This amount is paid against the administrative costs and other expenses of the issuer. Read MoreView Less
H
Holding Period
The holding period is the amount of time the sponsor plans to hold the property. Read MoreView Less
I
Income Approach
Income Approach is a method in real estate to estimate the value of the property based on the income it can generate. Read MoreView Less
Interest Rate
Part of the cost charged by a lender for the using their funds to finance a deal. Read MoreView Less
Interest-Only Payment
A monthly mortgage payment only requiring interest to be paid, with no pay down to the principal balance. Balance may be due on sale, refinancing or at the maturity of the loan. Read MoreView Less
Internal Rate of Return
IRR is calculated based on all future anticipated cash flow, plus principal pay down on debt and proceeds from the exit of a property. Read MoreView Less
Investment management
In real estate syndication, Investment Management is the professional management of the assets and securities, especially the investments made by the pool of investors to acquire a property or to complete a real estate project. Read MoreView Less
Investment management software
Investment Management Software is a tool that helps in various operations to manage investments made by the pool of investors in a real estate deal/project. An Investment Management Software helps syndicators to manage investment portfolios, optimize performance, track assets and audit compliances. Read MoreView Less
Investor
Investor is an individual or business pouring in money in a property expecting profits in return. Read MoreView Less
Investor Portal
Investor Portal is a tool to deliver deal-related content to the investors, including the details of their financial transactions, agreements and other deal-specific documents, tax-related documents, and more. Read MoreView Less
Investor Relations
Investor Relations is a combination of communication, financial transactions, and marketing to control the flow of information between syndication and investors. Read MoreView Less
Investor Statements
A document used to help explain the role of the investor and the responsibilities the investor might have within a syndication. Read MoreView Less
Investor Updates
Periodic updates explaining how the investment has been performing and other relevant details. Investor updates are frequently given on a monthly or quarterly basis. Read MoreView Less
J
Joint Venture
A Joint Venture is a partnership formed by two or more investment partners. They may be individuals or corporate investors. Read MoreView Less
K
K-1 Tax Form
A tax form used for reporting business-related income, losses, and dividend payments. Read MoreView Less
Key Principal
The key principle in apartment syndications is someone vital to the ongoing success of the investment. This person should be insured to cover any interruptions should something happen to them. Read MoreView Less
L
Lead Nurturing
Lead Nurturing is the process of capturing information about a potential investor and converting that potential investor into an actual investor by convincing about the prospects of the syndication and the possible profit share for the investor. Read MoreView Less
Lead Sponsor
The most important sponsor within a real estate syndication–this person often has the most responsibilities, in addition to being the largest stakeholder. Read MoreView Less
Lease
Lease is the contract between two parties, where one party provides a property to the other, in return of a periodic payment. Read MoreView Less
Letter of Intent
An LOI is a non-binding agreement provided by a buyer proposing their purchase terms. Typically used as a speedier method to make an offer, without being legally tied into the deal. Read MoreView Less
Limited Partner
A Limited Partner’s liability is limited to the extent of their share of ownership. It is common in a real estate syndication that the limited partner is a passive investor who simply puts in capital. Read MoreView Less
Loan-to-Cost Ratio
LTC ratio shows the value of the anticipated loan amount against total costs involved (acquisition and renovations). Read MoreView Less
Loan-to-Value Ratio
The LTV calculates the ratio of the loan amount divided to the apartment building’s appraised value. It is how much a lender will loan compared to the current value. Read MoreView Less
London Interbank Offered Rate
The LIBOR is a benchmark interest rate, often used to calculate mortgage loan rates and interest rate adjustments on variable rate loans. Read MoreView Less
Loss-to-Lease
Loss-to-Lease is the difference between the best rental rate as per the market conditions and the actual rent according to the Lease. Read MoreView Less
M
Market Rent
The market value of a rental unit for lease according to comparable rental rates for similar units in close proximity to the subject. Used to calculate value, cash flow and potential mortgage loan amounts. Read MoreView Less
Metropolitan Statistical Area
A MSA is a geo region with a substantial population. These are cities pooled together with neighboring communities having high degrees of integration. An example is the Miami Metropolitan Area. This MSA actually encompasses Miami, Fort Lauderdale and West Palm Beach, 3 counties, dozens of cities and even more neighborhoods. Read MoreView Less
Migration Process
The process of moving a parcel of land from the old paper-based records to modern online parcel-based registry system is called Migration Process. When the procedure gets an approval by the Land Registration Office, the particular land is ‘migrated.’ Read MoreView Less
Model Unit
Model Unit is a residential unit as a sample to be shown to prospects, but not for sale, unless all the housing units in the category are sold. Read MoreView Less
Mortgage
A loan taken to purchase or maintain a residential property, land, or any other type of real estate property is called Mortgage. The real estate property serves as the collateral for this loan. The borrower repays the loan in regular instalments that include principal and interest as per mutually agreed rate of interest. Read MoreView Less
Multifamily
Multifamily is a classification of housing property, in which multiple housing units are accommodated in the same building, or multiple buildings in the same complex. Read MoreView Less
N
Net Operating Income
NOI of a property is calculated by totaling all incoming revenue from a property and subtracting operating expenses. Read MoreView Less
Non-Recourse Loan
Non-recourse loans are loans on which the borrower is not obligated to sign a personal guarantee. The lender’s recourse to pursue the debt in default is effectively limited to the pledged real estate collateral the loan was made on. There may be carve-out exceptions to fraud and negligence. Read MoreView Less
O
Operating Account Funding
The process of organizing and financing the day-to-day functions of a real estate syndication. Operating account funding helps maintain property values over time. Read MoreView Less
Operating Expenses
The costs to run and maintain an investment property. In apartment syndications, operating expense usually includes; payroll, maintenance, repairs, contractors, management fees, property taxes, insurance, marketing, admin, utilities, and capital reserves. Read MoreView Less
P
Passive Investing
Passive investing is a process of investing for a long term, earning a regular profit share regularly. Passive investing doesn’t provide any control on the business entity, however brings a regular source of income to the investor. Read MoreView Less
Passive Investment
Placing your capital into a real estate syndication which is managed for you. Read MoreView Less
Permanent Agency Loan
A long-term mortgage loan guaranteed by a government sponsored agency like Fannie Mae or Freddie Mac. Loans can be amortized over as much as 30 years. Read MoreView Less
Physical Occupancy Rate
Physical Occupancy Rate is the percentage of residential units that are already occupied by tenants in a multifamily real estate property. Read MoreView Less
Preferred Return
Investors with preferred shares or preferred returns receive distributions and returns up to an agreed upon percentage before the sponsor. This holds them accountable and ensures interests are aligned. Read MoreView Less
Prepayment Penalty
A penalty for paying off a loan balance early, securing a desired rate of return for the lender and their investors. These clauses can be especially complicated calculations in commercial mortgage lending. Read MoreView Less
Price Per Unit
The price per unit of in an apartment building. In example; a 100 unit building for sale at $100k would have an effective price per unit of just $1k. Used as a method of comparing competing properties, assessing value and weighing returns between investments. Read MoreView Less
Private Placement Memorandum
Also known as the offering memorandum. A document that lays out the risks, objectives and terms of an investment, in addition to documenting the syndicator’s business operations and condition. Read MoreView Less
Pro forma
Pro forma is a document provided as a courtesy, to showcase compliance with the norms or doctrine, and it is performed prefunctionarily. Pro forma shows that the minimum requirements are met. Read MoreView Less
Pro-forma
Projected financial statement to estimate revenues and expenses. Often for 1 and 5 years. Read MoreView Less
Profile Management
The process of controlling personal settings within a specific platform, such as SyndicationPro. Read MoreView Less
Profit and Loss Statement (T-12)
A T12 is a profit and loss statement showing the actual reported numbers for the last 12 months. Read MoreView Less
Property and Neighborhood Classes
Property and Neighborhood Classes reflect the classifications of the properties in a location, usually by using the letters/grades A, B, C, and D. The classification of the properties is done based on various criteria. Read MoreView Less
Property Management Fee
Recurring cost of having a professional property management company handle the day-to-day operations of a property. Read MoreView Less
R
Ratio Utility Billing System
A RUBS system is a method to bill tenants back for incurred utility costs. May be based on occupancy or square footage leased. Read MoreView Less
Recourse
The right of a lender/creditor to pursue the debt owed to them. A full recourse loan can expose liability to personal assets beyond the collateral in the case of a default on the loan. Read MoreView Less
Refinance
The process of revising and replacing an existing credit agreement as per the current scenario is called as Refinance. Read MoreView Less
Refinancing
Replacement of a debt obligation on a property with a new loan. Read MoreView Less
Refinancing Fee
Refinancing fees is an amount to refinance a loan agreement. This cost includes lender fee, insurance, taxes, escrow and title fees, credit fees, and appraisal fees. Read MoreView Less
RegD 506b
RegD 506b is a provision in Regulation D of the Securities Act. It allows companies to raise funds without registering with the Securities and Exchange Commission (SEC). Read MoreView Less
RegD 506c
RegD 506c is a provision that allows issuers to broadly solicit and advertise an offering, when all the investors are accredited investors. The issuer can verify the accredited status of all investors and some conditions in Regulation D of the Securities Act are met. Read MoreView Less
Rent Comparable Analysis (Rent Comps)
An analysis and comparison of rents for properties with same features in an area or neighborhood is called Rent Comparable Analysis or Rent Comps. The process is similar to running sales comps. Read MoreView Less
Rent Premium
Rent premiums can be earned by completing upgrades and renovations. Read MoreView Less
Rent Roll
The spreadsheet or document detailing each of the unit in an apartment community. A good rent roll will include unit numbers, tenant names, unit types, square feet, market rents versus actual rent, deposit amounts held, move-in date and lease-start dates, plus lease-end dates and current status. Read MoreView Less
Reposition
Repositioning is a strategic utilization of renovations, remodeling, and upgrades to a property to change its position in the real estate market. Read MoreView Less
Reservation Module
A part of a real estate investment management system, where users can manage their reservations, make necessary changes, and complete certain actions. Read MoreView Less
Reservations
A common component of the property buying process in which a potential buyer (for a fee) reserves the right to buy the property for a specific period of time. Read MoreView Less
S
Sales Comparison Approach
The common method of estimating a property’s value based on recent similar sales in the area. Read MoreView Less
Sales Proceeds
Sales Proceeds are the actual proceeds from selling any real estate asset, after deducting any cost required to sell the real estate property. The cost for selling the property includes commissions and legal fees. The value is further deducted by the amount of any debts occured in the real estate asset. Read MoreView Less
SEC Compliant
SEC Compliant entity strictly adheres to the rules and regulations drawn and enforced by the Securities and Exchange Commission. Read MoreView Less
Soft Commitments
Soft Commitments are commitment term-sheets, wherein potential investors indicate their intent to invest in the project specified in the term-sheet, through a small payment in advance, and a mutually agreed deadline to invest the rest of the amount, while acquiring a property or completing a real estate project. Read MoreView Less
Sophisticated Investor
An individual deemed to have enough experience and knowledge to assess the risks and merits of an investment opportunity for themselves. Read MoreView Less
Sponsor
The General Partner individual or team, hosting a real estate syndication by gathering a pool of investors to acquire a property or completing a real estate project, and leading the routine administration and management of the real estate project (offering) is called Sponsor or Syndicator. Read MoreView Less
Subject Property
Subject Property is the residential unit that someone seeks to finance or refinance through a mortgage. Read MoreView Less
Submarket
Submarket is a geographic boundary outlining a core area competitive with other such areas comprising similar property types. Read MoreView Less
Subscription Agreement
Document used as a promise by the LLC that owns the property to sell a specific number of shares to a limited partner at a specified price, and a promise by the limited partner to pay that price. Read MoreView Less
Syndication
Syndications of apartment buildings are basically real estate partnerships. They bring together passive investors who have the capital with the active investor (syndicator or sponsor) which organizes, puts deals together, and manages the process. Read MoreView Less
T
Two-Way Email Sync
The facility to record one’s emails and responses automatically. The user doesn’t need to copy-paste emails. Read MoreView Less
U
Underwriting
The process of evaluating an apartment building community to determine the status, value, risks and potential returns. Read MoreView Less
V
Vacancy Loss
How much potential revenue and cash flow is lost on vacant units. Read MoreView Less
Vacancy Rate
The percentage of vacant units in a multifamily community. Read MoreView Less
Value-Add Property
Value-Add Property is a property that requires corrective actions or upgrades to reach its potential value. Read MoreView Less
Vet Soft Commitments
Vetting soft commitments involves reviewing possible investor partners and trying to determine whether they’d be a good fit. Read MoreView Less
W
Waterfall Structure
Waterfall Structure is a financial structure showing how the return on real estate investment will be distributed among the investors. Read MoreView Less
Y
Yield Maintenance
Yield Maintenance is a prepayment penalty to let the lender gain a similar yield, if the borrower could have made all the scheduled interest payments till the maturity of the particular loan. Read MoreView Less