Multifamily Terminology
"An accredited investor, in the context of a natural person, includes anyone who: earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years. In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you: n any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or any entity in which all of the equity owners are accredited investors." (Source: ​https://www.sec.gov/files/ib_accreditedinvestors.pdf)
When the value of an asset increases over time. With respect to apartments, there are two types of appreciation: natural and forced. Natural appreciation occurs over time, and is heavily influenced by the market. Alternatively, forced appreciation is when the value increases via targeted efforts made to increase the net operating income (as the net operating income is one method used to evaluate the value of the property). The means in which one increases the net operating income is by either increasing revenue, or by decreasing the expenses.
A short term mortgage loan that typically has higher interest rates, but is almost always interest only. Loan terms are normally six months to three years, with the option to purchase additional months/years. This type of loan is often used for value add apartments in which traditional financing is not an option. Bridge loans are also referred to as interim financing, gap financing, or swing loans.
The funds used to upgrade a property. Often referred to as CapEx, these upgrades are one time expenses, and can be either on the interior, or exterior. Examples of CapEx include new siding, roofs, pool, countertops, light fixtures, and paint. Some examples that are not CapEx are operating expenses, debt service, investor distributions.
"An accredited investor, in the context of a natural person, includes anyone who: earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold on the basis of joint income for the years during which the person was married and on the basis of individual income for the other years. In addition, entities such as banks, partnerships, corporations, nonprofits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you: n any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, or any entity in which all of the equity owners are accredited investors." (Source: ​https://www.sec.gov/files/ib_accreditedinvestors.pdf)
When the value of an asset increases over time. With respect to apartments, there are two types of appreciation: natural and forced. Natural appreciation occurs over time, and is heavily influenced by the market. Alternatively, forced appreciation is when the value increases via targeted efforts made to increase the net operating income (as the net operating income is one method used to evaluate the value of the property). The means in which one increases the net operating income is by either increasing revenue, or by decreasing the expenses.
A short term mortgage loan that typically has higher interest rates, but is almost always interest only. Loan terms are normally six months to three years, with the option to purchase additional months/years. This type of loan is often used for value add apartments in which traditional financing is not an option. Bridge loans are also referred to as interim financing, gap financing, or swing loans.
The funds used to upgrade a property. Often referred to as CapEx, these upgrades are one time expenses, and can be either on the interior, or exterior. Examples of CapEx include new siding, roofs, pool, countertops, light fixtures, and paint. Some examples that are not CapEx are operating expenses, debt service, investor distributions.



