What is Acquisition Cost?

Acquisition cost refers to the total expenses incurred in acquiring a property or investment, including purchase price, closing costs, fees, and any other costs directly associated with the acquisition process.

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Also Known As: cost of acquisition, procurement cost, purchase price, cost of ownership

What is Affordable Housing?

Affordable housing typically refers to housing options designed to be affordable for individuals or families with low to moderate incomes. It is generally defined as housing on which the occupant is paying no more than 30 percent of gross income for housing costs, including utilities.

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Also Known As: Low-Income Housing, Subsidized Housing

What is Allocation?

Allocation refers to the distribution or assignment of resources, funds, or assets to different categories or purposes. In real estate investing, allocation can refer to the division of investment capital among various asset classes, geographic regions, or specific properties.

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Also Known As: Asset Allocation, Portfolio Management, Investment Strategy, Risk Management

What are Alternative Investments?

Alternative investments encompass a diverse range of investment opportunities that differ from what many may consider traditional investments like stocks and bonds. Examples include real estate, private equity, venture capital, hedge funds, commodities, and other investment vehicles and often require specialized knowledge or access.

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Also Known As: Private Investments, Non-Traditional Investments

What is an Anchor Tenant?

An anchor tenant is a prominent, well-known tenant occupying a large portion of leased space within a commercial property or shopping center. They are typically major retailers or businesses that attract significant foot traffic and may act as a draw for other tenants.

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Also Known As: Key Tenant, Lead Tenant

What is an Ancillary Tenant?

An ancillary tenant refers to a secondary or supporting tenant within a commercial property or shopping center. They typically occupy smaller spaces and benefit from the foot traffic generated by the anchor tenant.

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Also known as: Secondary Tenant, Supporting Tenant

What is an Appraisal?

An appraisal is a professional assessment or estimation of the value of a property, typically conducted by a licensed appraiser. Appraisals take into account various factors such as the property's condition, location, comparable sales, and market conditions to determine its fair market value.

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Also known as: Property Valuation

What is Appraised Value?

Appraised value is the estimated value of a property determined through an appraisal process. It represents the professional appraiser's opinion of the property's fair market value based on factors such as its condition, location, comparable sales, and prevailing market conditions.

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Also known as: Assessed Value

What is Appreciation?

Appreciation refers to the increase in value of an asset over time. In real estate investing, appreciation typically refers to the increase in the value of a property due to factors such as market conditions, demand, improvements, or other economic factors.

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Also known as: Value Increase, Capital Growth, Depreciation, Capital Gains, Investment Return

What is an Asset Class?

An asset class refers to a group of financial instruments or investments that share similar characteristics and behavior in the marketplace. Common asset classes in commercial real estate investing include multifamily, industrial, office, retail, and hospitality properties.

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Also known as: Investment Category

What are Assets Under Management (AUM)?

Assets under management (AUM) refers to the total market value of investments or assets that a financial institution, investment manager, or fund oversees on behalf of clients or investors. In real estate, AUM can include the value of properties, portfolios, or real estate investment funds managed by a company or individual.

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Also Known As: Total Managed Assets, Investment Portfolio, Fund Management, Wealth Management

What is a Basis Point?

A basis point is a unit of measurement commonly used in finance and investing to represent a percentage change. One basis point is equal to 0.01%, or one-hundredth of a percentage point. As an example, a 5% change would equate to 500 basis points.

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Also Known As: BPS

What is CAGR?

CAGR stands for Compound Annual Growth Rate. It is a measure of the average annual growth rate of an investment or asset over a specific period, taking into account the compounding effect of returns or losses over time.

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Also Known As: Compound Annual Growth Rate

What is Capital?

Capital refers to financial resources or assets used for investment purposes, such as funds available for investing in real estate properties or businesses. Equity and debt are forms of capital typically used to fund commercial real estate projects.

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Also Known As: investment funds, financial resources, assets

What is Capital Gain?

A capital gain refers to the profit realized from the sale or disposition of a capital asset, such as real estate or stocks. It is calculated by subtracting the original purchase price, or cost basis, from the sale price.

Also Known As: Capital Profit, Investment Gain, Appreciation Gain, Asset Gain

What is Capital Gains Tax?

Capital gains tax is a tax imposed on the profits or gains generated from the sale or disposition of a capital asset, such as real estate or stocks. The tax rate may vary depending on factors such as the holding period of the asset and the individual's tax bracket. Tax aspects of such investments can be complex and may differ depending on the property or offering and on individual tax circumstances. Neither CrowdStreet or its affiliates offer tax or legal advice. Investors are strongly encouraged to seek advice from qualified tax professionals and/or legal experts regarding the tax consequences based on their particular circumstances.

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Also Known As: Investment Profit Tax

What is the Capital Stack?

The Capital Stack refers to the various sources of capital, including debt and equity, used to finance a real estate project or investment. It represents the different layers or levels of funding and their priority of repayment in the event of a sale or default.

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Also Known As: Capital Structure, Finance Stack, Debt-Equity Structure, Capital Hierarchy

What is Capitalization Rate (Cap Rate)?

Capitalization rate, commonly known as cap rate, is a measure used in real estate to estimate the potential return on an investment property. It is calculated by dividing the property's net operating income (NOI) by its purchase price or value.

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Also Known As: Cap Rate, Yield Rate, Investment Yield, Property Yield, Rate of Return

What is Cash Flow?

Cash flow refers to the net amount of cash generated or received from an investment or business after deducting all expenses, operating costs, and debt obligations.

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Also Known As: Net Operating Income

What is 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.

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Also Known As: CoC Return, Cash Yield, Cash Return on Investment

What are Closing Costs?

Closing costs are the fees, charges, and expenses associated with the purchase or sale of a property. These costs typically include expenses such as title insurance, appraisal fees, attorney fees, loan origination fees, and other charges related to the closing process.

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Also Known As: Transaction Fees, Settlement Costs

What is Collateral?

Collateral refers to an asset or property that is pledged as security for a loan or debt. In the event of default, the lender can seize and sell the collateral to recover the amount owed. Real estate properties are commonly used as collateral for mortgage loans.

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Also Known As: Security Asset

What is Commercial Property?

Commercial property refers to real estate properties that are used for commercial purposes, such as office buildings, retail centers, industrial facilities, or multifamily apartment complexes. Commercial properties are often used for business or investment purposes and may have the potential to generate income through leasing or other activities.

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Also Known As: Commercial Real Estate, Business Property

What is Commercial Real Estate?

Commercial real estate, often abbreviated as CRE, refers to properties used for commercial purposes, including office buildings, retail centers, hotels, industrial facilities, and multifamily apartment complexes. CRE encompasses properties intended for business operations or investment purposes.

What is Compound Interest?

Compound interest refers to the interest that is calculated not only on the initial principal amount but also on the accumulated interest from previous periods. It allows investments or debts to grow at an increasing rate over time, taking into account the compounding effect of reinvested earnings or added interest.

What is a Contingent Offer?

A contingent offer is a purchase offer for a property that is dependent on certain conditions or contingencies being met. These contingencies often include inspections, financing, or the sale of the buyer's current property. If the contingencies are not satisfied within a specified timeframe, the offer may be terminated.

What is the Core Investment Strategy?

Core is a real estate investment strategy focused on 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.

What is the Core Plus Investment Strategy?

Core plus is a real estate investment strategy that generally involves the acquisition of existing properties 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 rental rates.

What is Debt?

Debt refers to money borrowed or owed by an individual, company, or entity. In real estate investing, debt is commonly used to finance the purchase or development of properties, with the borrower agreeing to repay the principal amount plus interest over a specified period.

What is Debt Service?

Debt service refers to the regular payments made by a borrower to repay the principal amount and interest on a loan. In real estate, debt service typically refers to the mortgage payments made by property owners to service their mortgage debt.

What is Default?

Default occurs when a borrower fails to fulfill their financial obligations or comply with the terms of a loan or agreement. In real estate, default typically refers to the failure to make mortgage payments, which can lead to foreclosure and the loss of the property by the borrower.

What is Delinquent?

Delinquent refers to a borrower who fails to make timely payments on a loan or fulfill their financial obligations. In real estate, delinquent borrowers are typically those who are behind on their mortgage payments, which can lead to foreclosure proceedings initiated by the lender.

What are Demographics?

Demographics refers to the characteristics of a population or a specific group within a population, such as age, gender, income, education level, or household size. In real estate, demographic data is often used to analyze market trends, target specific customer segments, or assess the demand for certain types of properties.

What is Depreciation?

Depreciation refers to the decline in value of an asset over time due to wear and tear, obsolescence, or other factors. In real estate investing, depreciation is generally a tax deduction that can allow property owners to account for the gradual loss of value of their properties. Tax aspects of such investments can be complex and may differ depending on the property or offering and on individual tax circumstances. Neither Crowd Street or its affiliates offer tax or legal advice. Investors are strongly encouraged to seek advice from qualified tax professionals and/or legal experts regarding the tax consequences based on their particular circumstances.

What is Development?

Development in real estate refers to the process of converting raw land or underutilized properties into improved properties. It generally involves activities such as planning, zoning, design, construction, and marketing to create new buildings, subdivisions, or mixed-use developments.

What is Distressed Property?

Distressed property refers to real estate that is in poor physical condition or facing financial difficulties, such as foreclosure, bankruptcy, or default. These properties are often sold at a discount compared to similar properties in better condition or financial standing.

What are Distributions?

Distributions, in real estate investing, refer to the periodic payments or dividends distributed to investors or partners based on the profits, income, or cash flows generated by a real estate investment or partnership. It's important to note, however, that distributions are never guaranteed.

What is Diversification?

Diversification is a reconcentration risk management strategy that involves spreading investments across different assets, markets, or investment types to reduce exposure to any single investment and help minimize risk.

What is Downside Protection?

Downside Protection means using techniques in an effort 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.

What is Due Diligence?

Due diligence refers to the process of conducting a comprehensive and thorough investigation or examination of a property, investment, or business before making a decision or entering into a transaction. It can involve verifying information, assessing risks, reviewing contracts or legal documents, and analyzing financial data in an effort to ensure informed decision-making.

What is an Entity?

In real estate, an entity refers to a legal structure, such as a corporation, limited liability company (LLC), partnership, or trust, used to hold or own real estate properties. Entities are often created to protect the property owner's personal assets, manage tax obligations, or facilitate joint ownership arrangements.

What is Equity?

Equity in real estate refers to the ownership interest or value that an owner or investor holds in a property after deducting any outstanding debts or liabilities. It represents the residual value or net worth of the property owner's investment.

What is Equity Multiple?

Equity multiple is a financial metric that measures the total return on an investment relative to the initial investment.

What is Fair Market Value?

Fair market value refers to the estimated price at which a property would change hands between a willing buyer and a willing seller, both having reasonable knowledge of the property and neither being under compulsion to buy or sell. It represents the value of the property in an open and competitive market.

What is a 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.

What is the Hold Period?

In commercial real estate, the hold period is the time between when the investment is made and when the property sells.

What is a 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."

What is Industrial Real Estate?

Industrial refers to a category of commercial real estate focused on properties used for manufacturing, production, storage, and distribution of goods. These properties are critical to supply chain and logistics operations and typically include warehouses, distribution centers, flex spaces, light manufacturing facilities, and heavy industrial buildings.

What is an Investing Entity?

In commercial real estate an investing entity is the vehicle that makes an investment in a commercial real estate offering.

What is Internal Rate of Return (IRR)?

Internal Rate of Return (IRR) is a financial metric used in commercial real estate to measure the profitability of an investment over time. It represents the discount rate at which the net present value (NPV) of all cash flows from the investment—both incoming and outgoing—equals zero. Essentially, IRR reflects the annualized rate of return expected from the project, accounting for the timing and magnitude of cash flows.

What is Leverage?

Leverage is the use of various financial instruments or borrowed capital to purchase and/or enhance the potential return of an investment. In commercial real estate, leverage typically involves borrowing funds—such as through loans or mortgages—to acquire properties or finance improvements. By using borrowed capital, investors can amplify their purchasing power, enabling them to control larger assets with a smaller upfront equity investment.

What is a Limited Partner?

A limited partner is a business partner whose liability is limited to the amount of their investment in the company.

What is Loan-to-value Ratio (LTV)?

Loan-to-value ratio (LTV) is calculated by dividing the loan amount over the appraised property value.

What is Market Value?

Market value is the price an asset would fetch in the public marketplace.

What is Multifamily Real Estate?

Multifamily refers to a category of commercial real estate comprising residential properties designed to accommodate multiple separate housing units within a single building or complex. These properties include apartments, condominiums, townhomes, and duplexes with more than four units, distinguishing them from single-family residences. Multifamily investments are popular among commercial real estate investors for their potential to generate steady rental income and benefit from long-term property appreciation. Factors such as location, tenant demand, and market conditions significantly influence the performance and value of multifamily properties.

What is Net Operating Income (NOI)?

Net operating income (NOI) equals all revenue from the property minus all operating expenses.

What is Office Real Estate?

Office refers to a category of commercial real estate comprising properties designed to accommodate businesses and professional services. These spaces range from small, single-tenant buildings to large multi-tenant office towers and are classified into categories such as Class A, Class B, and Class C, based on factors like location, building quality, and amenities. Office properties are often further categorized by use, including traditional office space, co-working spaces, medical offices, and flex spaces.

What Does Opportunistic Mean?

Opportunistic refers to a high-risk, high-return investment strategy. Opportunistic investments typically involve properties or assets that require significant enhancement, repositioning, or development to realize value. These projects often carry greater uncertainty and longer time horizons but offer the potential for outsized returns compared to core or value-add strategies.

What is Oversubscription?

A commercial real estate offering is "oversubscribed" when the investor funds offered exceed the total equity the sponsor was looking to raise."

What is Pari-passu?

Pari-passu is a Latin phrase meaning equal footing. It refers to a situation where multiple investors, lenders, or classes of securities share equal rights to payment, rank equally in seniority, and have the same claim priority on assets in the event of a distribution or liquidation. Essentially, no party has preferential treatment — all pari-passu holders are paid proportionally at the same level of priority.

What is 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 is achieved.

What is Private Credit?

Private credit refers to loans made by funds and finance firms rather than banks. These non-bank lenders operate outside the traditional banking system, providing capital directly to consumers, businesses, or large corporate borrowers.

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Also Known As: private debt, direct lending, private lending

What is Private Equity?

Private equity means investing in privately held companies through negotiated deals. These investments typically involve taking an ownership stake and playing an active role in managing and growing the business.

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Also Known As: private investment, private capital, private financing

What is a Real Estate Broker?

A real estate broker is a licensed professional or firm that facilitates real estate transactions between buyers and sellers, landlords and tenants, or investors and investment opportunities. Real estate brokers can represent either party in a transaction and typically earn a commission based on the value of the transaction.

What is a Real Estate Syndicate?

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

What is a REIT (Real Estate Investment Trust)?

A REIT (Real Estate Investment Trust) is a company that owns, operates, or finances income-producing real estate across various property sectors.

REITs allow investors to gain exposure to real estate portfolios without directly owning or managing properties. They can be publicly traded, non-traded, or private, and they provide an accessible way to invest in commercial real estate through liquid or semi-liquid structures.

What is Retail Real Estate?

Retail property types range from single-tenant buildings, like a stand-alone pharmacy, to full shopping centers with dozens or even hundreds of tenants.

What is an 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.

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Also Known As: Self-Directed IRA, SD-IRA

What is Self-Storage?

Self-storage is a segment of commercial real estate consisting of facilities that provide rentable storage units for individuals and businesses. These properties cater to diverse needs, including storing personal belongings, business inventory, seasonal equipment, or vehicles. Self-storage facilities typically feature a mix of unit sizes, climate-controlled options, and enhanced security measures like gated access, surveillance cameras, and on-site management.

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Also Known As: Storage Facility

What is Senior Housing?

Senior housing is a specialized sector of commercial real estate that provides residential facilities and care services tailored to the needs of older adults, typically aged 55 and above. These properties encompass a range of options, including independent living, assisted living, memory care, and skilled nursing facilities. Each type offers varying levels of care and support, from minimal assistance for active seniors to comprehensive medical and daily living support for those with greater needs.

What is a 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.

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Also known as: Investment Sponsor

What is Valuation?

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

What is a Value-Add Property?

A Value-Add property is a project 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 leverage.

What is Venture Capital?

Venture capital is a form of private investment where funds are provided to startups or small businesses with strong growth potential, in exchange for an ownership stake, typically focusing on companies that cannot secure financing through traditional means and involving a high level of risk for the investor.

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Also Known As: VC, risk capital, equity capital, financial backing, seed money

What is 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 benefit of using the XIRR Excel function is that these unevenly timed cash flows can be accurately modeled.

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Also Known As: Extended IRR