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.
The annual percentage rate measures the amount of interest an investment earns over the course of a year. When interest is compounded, investments grow faster because the new interest earned each period includes the principal investment, plus the previous periods' interest. This is unlike simple interest, which applies only to the principal amount. Depending on the investment, interest can be compounded annually, quarterly, monthly or daily.
The capitalization or cap rate shows the potential rate of return on a real estate investment and is often used in evaluating a real estate investment. It measures a property’s yield during 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
Cash-on-cash return is one of the most widely used metrics in commercial real estate. As the name implies, this metric is calculated by dividing annual before tax cash-flow by the total cash invested in a project.
A Dividend Reinvestment Program “DRIP” allows investors to automatically reinvest the dividends they earn from their investments directly back into offerings on the platform. Investors have the ability to choose the offerings into which they would like the dividends reinvested.
As it relates to real estate, is the difference between the market value of a home and the amount owed to the lender on the mortgage. Equity, specifically Gross Equity, refers to the money received after the mortgage has been paid, in cases of a sale, while the Net Equity includes the costs of selling the property, such as property taxes or commission for the realtor.
In real estate, the Internal Rate of Return (IRR) is a metric used to evaluate the profitability of an investment over its lifetime and is represented as the average annual return percentage. The IRR is defined as the discount rate at which the net present value of a set of cash flows (ie, the initial investment, expressed negatively, and the returns, expressed positively) equals zero. In more simple terms, it is the rate at which a real estate investment grows. IRR can be thought of as a time sensitive compounded annual rate of return.
The IRR is useful because it can provide a direct comparison of two cash flows with different distribution timings.
While the Securities and Exchange Commission regulates public securities on a national level, each state also has its own regulatory entity serving a similar function. Since the passage of the JOBS Act, advocates of equity crowdfunding have moved to legalize intrastate – or in state – crowdfunding.
An investment property is a real estate asset purchased with the sole purpose of earning income. Income from an investment property can be generated through leasing space within an asset or an eventual sale of the asset.
Liquidity refers to the ease with which an asset can be purchased or sold. Marketable securities that are traded in high volume tend to be the most liquid, or easy to trade without creating wild fluctuations in price.
The loan-to-cost (LTC) ratio is a metric used in commercial real estate construction used to compare the financing of a project as offered by a loan to the cost of building the project. The LTC ratio allows commercial real estate lenders to determine the risk of offering a construction loan.
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks and building societies to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property.
A hybrid of debt and equity financing that, after senior lenders and venture capital companies are paid, allows the lender to convert to an ownership or equity interest in the company in case of default. This type of financing is junior in interest to the mortgage but senior in interest to equity. Mezzanine financing is typically secured by a pledge of the equity interests in the legal entity (such as a limited liability company or partnership) that owns the underlying property. Mezzanine debt is only indirectly secured by the property. Similar to other loans, mezzanine financing typically has a stated fixed or floating interest rate, a specified maturity date, and these terms are detailed in the mezzanine loan documents. In the event of a breach or default, the mezzanine lender may enforce its pledge of equity in the ownership entity through a UCC sale or foreclosure.
The Net Asset Value (NAV) per share represents the estimated value of a single share based on a variety of factors. Net asset value (NAV) is value per share of a mutual fund or an exchange-traded fund (ETF) on a specific date or time. With both security types, the per-share dollar amount of the fund is based on the total value of all the securities in its portfolio, any liabilities the fund has, and the number of fund shares outstanding.
A document explaining a new offering of securities for private placement. Private placement involves selling securities without registering with the SEC. A private placement memorandum must then explain exactly why the offering complies with SEC Regulation D exempting certain companies from registration; this is done to protect both the issuer and the investors. According to Regulation D, a PPM must contain a complete description of the security and the terms of the sales. It must also include applicable information about the issuer's financial situation and applicable risk factors. Because securities for general issue must be registered under Regulation D, a PPM is not allowed to contain a general offer for investment.
Preferred Equity is an equity investment which is superior in interest to common equity but subordinate to debt. Preferred equity is secured by a direct holding of equity interest in the property-owning entity. Preferred equity investments are superior in interest to common equity yet subordinate to debt. Preferred equity is a direct holding of an equity interest in a property-owning entity. Preferred equity investments receive payments as a preferred return in a similar fashion as debt investments receive payments and have a redemption date much like a maturity date of a loan.
A private equity (PE) fund is a collective investment model where money from separate investors is pooled together into a single fund and then used to make investments, most often in various illiquid equity and debt assets.
Also known as residual or passive income, recurring income is earned by creating or acquiring an asset that continues to pay of profits regardless of if there is still active work being done to the asset.
Regulation D permits raises of unlimited amounts from accredited investors without registering a public sale through the SEC, as it’s assumed that accredited investors are financially able to bear the burden of investment decisions without a review by the SEC.
The profit or loss incurred on investments which includes income and change in value. A return is often expressed as a percentage and is calculated by adding the income and the change in value, and then dividing the sum by the initial investment amount or principal.
In secured debts, the borrower promises to repay the loan and uses an asset as surety for the loan. A secured position in the Capital Stack retains the right to foreclose on a property in the event of a default, or non-performance.
The Capital Stack orders the seniority of claims to the collateral and cash waterfall of an entity. The capital stack is an important concept in real estate investment, as it details how a transaction is financed. Most commercial real estate acquisitions or developments receive investment from more than one source, and from investors with different goals. The two main divisions in the capital stack are debt and equity financing.
In this type of investment, there is no collateral backing, so lenders issue funds based solely on the borrower's creditworthiness and promise to repay. These loans typically come with a higher interest rate and stricter debt-to-income requirements.
In the context of commercial real estate, yield refers to the annual cash return on the investment, expressed as a percentage of the investment’s initial cost, or less frequently, its estimated current value.
Throughout history, real estate has proven to be the best way to build and retain wealth for the relative few who have been able to take advantage of this outstanding investment class.
Multifamily Combined Debt and Equity Investment 506(c)
5068 W. Plano Pkwy, #300
Plano, TX 75093
The information on the website includes historic results of certain investments made by EquityBuild; however, past performance is no guarantee of future results. Historic returns may not reflect actual future performance, may not reflect potential deductions for fees which may reduce actual realized returns. Investors are advised that any investment with EquityBuild may experience different results from those shown. Projected IRR and multiples are based upon the anticipated redemption or maturity date. All investments offered by EquityBuild involve risk and may result in loss.
Some of the statements contained on the EquityBuild website are forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. These statements involve known and unknown risks, uncertainties, and other factors that may cause an investment’s actual results, levels of activity, performance, or achievements to be materially and adversely different from those expressed or implied by these forward-looking statements. Forward-looking statements may be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “targeted,” “projected,” “underwritten,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology.
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The information on this website contains a preliminary summary of the purpose and principal business terms of the investments offered by EquityBuild. This summary does not purport to be complete and is qualified in its entirety by reference to the more detailed discussion contained in the actual text of the definitive documentation regarding such investment. Further, the overviews presented on the EquityBuild website do not constitute an offer to sell or a solicitation of an offer to make an investment herein. No such offer or solicitation will be made prior to the delivery of definitive documentation relating to such investment. The information on this website does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, any securities to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful.
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An accredited investor is an individual that reported income of $200,000 or more in the most recent 2 tax years and expects to report the same in the upcoming tax year, a married couple that reported $300,000 or more or has net assets not counting personal residence of at least $1 million dollars regardless of income.
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