1031 Exchange
A tax deferral strategy that allows investors to sell an investment property and reinvest the proceeds into a like-kind property while deferring capital gains taxes.

1099-INT
A tax form used to report interest income earned from investments, savings accounts, or debt instruments. Investors in debt funds typically receive this form to report interest income on their tax returns.

Accelerated Depreciation
A tax strategy that allows property owners to deduct a larger portion of the property’s value in the earlier years of ownership, resulting in greater tax benefits upfront. Learn more.

Annual Rate of Return
A yearly performance metric that measures the percentage gain or loss on an investment over a 12-month period. It reflects the investment’s profitability on an annualized basis, allowing investors to compare performance across different assets and timeframes. The annual rate of return may include income generated (such as dividends or distributions) and capital appreciation, depending on the calculation method used.

Bonus Depreciation
A tax incentive that allows businesses to immediately deduct a large percentage of the purchase price of eligible assets in the year they are placed into service, rather than depreciating them over their useful life. This accelerates tax savings and improves cash flow. Learn more.

Bonus Depreciation Phase-Out
A scheduled reduction of bonus depreciation benefits as established under the Tax Cuts and Jobs Act (TCJA). The 100% bonus depreciation begins to phase out after 2022, gradually decreasing each year until it is eliminated unless extended by new legislation. Learn more.

Bridge Loan
Short-term financing used to ‘bridge’ the gap between property acquisition and securing permanent financing, often used in value-add strategies.

Cap Rate
A key valuation metric used to assess and compare real estate investment opportunities. The cap rate is calculated by dividing a property’s net operating income (NOI) by its current market value or purchase price, expressed as a percentage. It represents the expected annual return on an all-cash purchase and is commonly used to evaluate the relative risk and return of income-producing properties. While useful for quick comparisons, cap rates do not account for factors such as leverage, future income growth, or tax implications.

Cash-on-Cash Return
Annual cash income relative to invested cash.

Catch-up Provision
A clause in the partnership agreement that allows the GP to receive a larger share of profits after the LP has received their preferred return, enabling the GP to ‘catch up’ to their agreed-upon profit-sharing percentage. Learn more.

Class
A designation (typically A, B, C, or D) that categorizes multifamily properties based on age, quality, amenities, location, and tenant income levels. Learn more.

Co-GP
An investment opportunity that allows you to invest on the GP’s side while remaining passive. This means you can invest like an LP but earn like a GP. Learn more.

Cost Segregation
A tax strategy that identifies and reclassifies certain building components to allow for accelerated depreciation, resulting in significant tax savings. Learn more.

Crowd Funding
A method of raising capital from multiple investors through online platforms, allowing smaller investors to participate in real estate deals with lower minimum investments. Learn more.

Depreciation
A tax deduction that allows property owners to write off the cost of their real estate investment over time, accounting for the theoretical decrease in the property’s value due to wear and tear. Learn more.

Depreciation Recapture
A tax provision that requires investors to pay taxes on the portion of gains attributed to prior depreciation deductions when a property is sold. Recaptured depreciation is typically taxed at a higher rate than long-term capital gains. Learn more.

Distributions
Periodic payments made to investors from the income generated by an investment. In real estate funds, distributions typically consist of rental income, interest payments, or proceeds from asset sales. These payments may be made monthly, quarterly, or annually, depending on the fund structure and investment strategy. Distributions can represent a portion of profits, preferred returns, or a return of capital.

Equity Multiple
A metric that shows the total return on investment as a multiple of the original investment (e.g., a 2x equity multiple means doubling your money). Learn more.

Exit Cap Rate
The assumed capitalization rate applied to estimate the value of a property at the time of sale. The exit cap rate is a critical factor in financial modeling, as it directly impacts projected sale price and overall investment returns. Typically, a more conservative (higher) exit cap rate is used in projections to account for future market uncertainty and potential softening in property values.

Fund (Multifamily & NNN)
A pooled investment vehicle that aggregates capital from multiple investors to acquire and manage a diversified portfolio of multifamily properties and NNN (Triple Net) retail assets. Operates under a defined investment strategy and timeline.

GP / General Partner
The managing partner responsible for executing the business plan, making key decisions, and handling day-to-day operations, while typically holding unlimited liability for the investment. Learn more.

IRR (Internal Rate of Return)
A metric that measures the annualized return on an investment, taking into account the time value of money and the timing of cash flows.

K-1 Statement
A tax document issued to investors in partnerships, LLCs, and certain funds that outlines each investor’s share of income, deductions, and tax liabilities. Investors use the K-1 to complete their personal tax returns.

LP / Limited Partner
Passive investors who provide capital but have no management responsibilities and limited liability up to their investment amount. Learn more.

Loss-to-Lease
The difference between market rents and actual in-place rents, representing potential upside in rental income.

Net Operating Income (NOI)
Total revenue minus operating expenses before debt service and capital expenditures.

Preferred Return (Pref)
A minimum return that limited partners must receive before the general partner can participate in profits.

Pro-Rata Allocation
The proportional distribution of profits, losses, tax benefits, and other financial metrics based on each investor’s ownership percentage in a partnership or investment fund. This ensures equitable allocation of returns and tax considerations.

Promote
An incentive structure that rewards the GP with a higher percentage of profits after reaching certain return thresholds for the LPs, aligning the interests of both parties.

REIT / Real Estate Investment Trust
A company that owns, operates, or finances income-producing real estate and allows individuals to invest in large-scale real estate through publicly traded shares. Learn more.

ROI (Return on Investment)
A performance metric that measures the overall return generated on an investment as a percentage of the capital invested. ROI is calculated by dividing the net profit from an investment by the initial capital outlay, providing a straightforward way to assess profitability. While commonly used for quick comparisons, ROI does not account for the time horizon or risk profile of the investment.

Recapture Tax Rate
The tax rate applied to depreciation recapture income when an investment property is sold. Under current U.S. tax law, this rate is typically capped at 25%, higher than the long-term capital gains tax rate. Learn more.

SIDRA (Structured Institutional Disposition and Retirement of Assets)
A specialized real estate disposition strategy designed for institutional owners seeking to systematically divest and retire assets while optimizing tax efficiency and maximizing value. SIDRA strategies often involve phased asset sales, portfolio segmentation, and structured timelines to minimize market disruption and enhance after-tax proceeds.

Sponsor
The primary real estate operator responsible for finding, acquiring, managing, and executing the business plan for a property or portfolio.

Syndication / Syndicate
A method of pooling capital from multiple investors to purchase real estate that would be too expensive for individual investors, typically structured with a sponsor and passive investors. Learn more.

Tax-Deferred Income
Investment income that is not subject to taxes until a future date, often upon the sale of an asset or withdrawal of funds. Tax deferral strategies, such as 1031 exchanges or retirement accounts, allow investors to delay paying taxes and potentially grow wealth more efficiently.

Value-Add
An investment strategy focused on purchasing properties that need physical improvements or better management to increase income and property value.

Waterfall
A structured distribution model that dictates how profits are shared between GPs and LPs at different return thresholds, typically becoming more favorable to the GP as returns increase. Learn more.

Workforce Housing
Residential rental properties that are affordable for middle-income workers (typically 60–120% of area median income), often representing Class B or C properties in good locations. Learn more.