An accredited investor is a person or entity that can deal with securities not registered with financial authorities by satisfying one of the requirements regarding income, net worth, asset size, governance status or professional experience.
Active income is income earned as a direct result of a specific effort. In other words, input is correlated to output.
After Repair Value (ARV)
In real estate investing, properties are often purchased in less than great condition, with the plan to make repairs or remodel them and resell or flip them at a profit. When an investor looks at the viability of a project, they must be able to estimate the value of the property after all repairs are completed called the after repair value.
An alternative investment refers to any investment which does not qualify as “traditional”. Traditional investments are widely considered to be stocks, bonds and cash.
As opposed to an interest-only loan in which each repayment installment consists only of interest payments with a single lump-sum principal repayment at the end of the loan period, each repayment installment of an amortizing loan consists of both principal and interest.
An increase in value is referred to as “appreciation”.
A mortgage that can be assumed by the buyer when a home is sold. Usually, the borrower must “qualify” in order to assume the loan.
The final lump sum payment that is due at the termination of a balloon mortgage.
A basis point (bps) is a unit that is equal to 1/100th of 1%, in other words one basis point is equal to 0.01%, similarly a 1% change is equal to a 100 basis point change.
Short term loan, used to bridge the gap. For example a loan used to buy a property until a permanent loan can be secured.
Capital is any financial asset or the value of an asset.
The Capital Stack orders the seniority of claims to the collateral and cash waterfall of an entity.
Capitalization (Cap) Rate
The capitalization or cap rate measures a property’s yield in a one-year time frame, making it easy to compare one property’s cash flow to another on an equal basis – without taking into account any debt on the asset