Glossary Terms

ALL A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
  • Cap Rate

    The capitalization (or ‘cap’) rate is a term that is used frequently in real estate asset sales and purchases. The cap rate is a ratio of two variables: net operating income and the current value or sale price of a property. Another way to think ...

  • Capital Improvement

    A capital improvement is an improvement that adds to the value of an asset, prolongs its useful life or adapts it to new uses. In addition to improving the property, a capital improvement also increases the cost ...

  • Cash-on-cash Return

    Cash-on-cash return calculates the cash income earned on the cash invested in a property. It’s sometimes also referred to as the cash yield. Cash-on-cash measures the return on the actual cash invested, whereas ...

  • Core

    Existing assets generally with little need for capital improvements, typically in major metros, with high occupancy, longer weighted average lease term (WALT), creditworthy tenants, and rents near or above market rate.

  • Core-Plus

    Existing assets with typically attractive occupancy rates, but with the potential to increase cash flow or property value through light improvements, operational efficiencies, and slight increases to the amount or quality of tenants, or ...

  • Development

    Development is considered a subset of opportunistic real estate and has many moving pieces that cause these projects to be high on the risk profile. These risk factors can include pre-development risk (surveys, permitting, entitlement), vertical ...

  • Downside Protection

    Using techniques to prevent a decrease in the value of the investment. It is a common objective of investors and fund managers to avoid losses and many instruments can be used to achieve this objective.

  • Equity Multiple

    What is Equity Multiple as it Applies to Real Estate?

    Equity multiple is a financial metric that measures the total return on an investment relative to the initial investment. It's calculated by dividing the total cash ...

  • General Partner

    A general partner is an owner of a partnership who has unlimited liability. They are usually a managing partner and are active in daily business operations. General partners are liable for the partnership's legal ...

  • Hold Period

    In commercial real estate, the hold period is the time between when the investment is made and when the property sells. Since real estate investments are illiquid, investors are unable to sell their investment before the end of that hold period, ...

  • Hotel

    The main type of property within the hospitality moniker is hotels. Hotels are defined primarily by the services and amenities that they offer, but also by the “flag” or operating brand of the property. This includes brands like Holiday Inn, ...

  • Industrial

    The industrial sector is arguably the least glamorous commercial real estate asset class. There are no elaborate architectural design features, resort-like amenities, or high-profile addresses. Instead, industrial real estate is intended to ...

  • Investing Entity

    An investing entity is the vehicle that makes an investment in a commercial real estate offering. On the CrowdStreet Marketplace, offers must be made by an investing entity, in which you may be a member. You may be the only solitary member or a ...

  • IRR

    What is IRR (Internal Rate of Return) in Real Estate?

    The Internal Rate of Return, or IRR, is one metric commonly used in financial analysis to evaluate and compare different investments. It represents the percentage rate ...

  • Leverage

    Leverage is the use of various financial instruments or borrowed capital to purchase and/or increase the potential return of investment. Assume a buyer puts 20% down on a $5M property. Essentially, they paid $1M to ...

  • Limited Partner

    A limited partner is a business partner whose liability is limited to the amount of their investment in the company. They are also known as silent partners and their income is considered as

  • LTV

    Loan-to-value ratio (LTV) is calculated by dividing the loan amount over the appraised property value. Typically, offerings with high LTV ratios are higher risk as the Sponsor will be liable for paying the loan ...

  • Market Value

    Market value is the price an asset would fetch in the public marketplace. In commercial real estate, market value can be impacted by the location of the property (major market versus rural), demand for that asset ...

  • Multifamily

    In the past, multifamily properties (think apartment buildings) were more often grouped with other residential assets like single-family homes than rolled in with commercial real estate. However, multifamily assets now account for the ...

  • NOI

    Net operating income (NOI) equals all revenue from the property minus all operating expenses. In addition to rent, a property might generate revenue from parking and/or service fees such as laundry, housecleaning ...

  • Office

    Office buildings come in all shapes and sizes, from 100-story glass and steel towers in Manhattan to a one-story bricker in Des Moines. Office properties are generally distinguished by height, location, and use.

    Employment growth is ...

  • Opportunistic

    Project could require heavy redevelopment, full development, or repositioning to reach its highest potential value. Other situations include distress, major tenancy issues, or other risks requiring drastic intervention from a new ...

  • Oversubscription

    A commercial real estate offering is “oversubscribed” when the investor funds offered exceed the total equity the sponsor was looking to raise. Essentially, it means there is more demand than supply. To help reduce the rate of oversubscribed ...

  • Pari-passu

    A Latin phrase meaning “equal footing,” used to describe situations where two or more assets, securities, creditors or obligations are equally managed without preference. On the CrowdStreet marketplace, all offerings are treated pari-passu and ...

  • Preferred Return

    As the name suggests, preferred return is a profit distribution preference whereby profits, either from operations, sale, or refinance, are distributed to one class of equity before another until a certain rate of return on the initial investment ...

  • Real Estate Syndicate

    A real estate syndicate is a group of investors who pool their capital to buy or build property.

  • REIT

    Modeled after mutual funds, a REIT (real estate investment trust) is a company that owns, operates or finances income-producing real estate. They ...

  • Retail

    Retail property types range from single-tenant buildings, like a stand-alone pharmacy, to full shopping centers with dozens or even hundreds of tenants. Retail centers that have more than a single tenant are grouped by size and tenant type.

    ...
  • SDIRA

    A self-directed IRA (SDIRA) is when the investor is in charge of making all their own investment decisions and are not usually offered by traditional brokerage firms. They provide investors with a greater ...

  • Self Storage

    Self-storage is a segment of the real estate market that has continued to evolve in the past decade. The traditional rural and suburban properties with gravel driveways and roll-up metal doors are being replaced with modern facilities and ...

  • Senior Housing

    The aging Baby Boomer population is attracting more investment capital into this sector in terms of acquisitions, development, and property renovations. Senior housing properties aim to provide both housing and services to seniors and are ...

  • Sponsor

    In commercial real estate, the sponsor is an individual or company in charge of finding, acquiring, and managing the real estate property on behalf of the partnership. The sponsor is usually expected to invest anywhere from 5-20% of the total ...

  • Valuation

    Valuation is the process of determining the current worth of an asset or a company.

  • Value-Add

    Projects requiring significant investment, improvement, and oversight to achieve goals, likely including interior and exterior renovations, operational efficiencies, leasing risk, increasing undervalued rents, and the likelihood of higher ...

  • xIRR

    The xIRR is a way of calculating the IRR for a series of cash flows that may not be periodic by assigning specific dates to each individual cash flow. xIRR is a complicated calculation done in Excel or other financial modeling software. The main ...