Helpful terms to know

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A person that can invest in apartment syndications by satisfying one of the requirements regarding income or net worth. The current requirements to qualify are an annual income of $200,000, or $300,000 for joint income, for the last two years with the expectation of earning the same or higher, or a net worth exceeding $1 million either individually or jointly with a spouse. 

A temporary professional financial services alliance formed for the purpose of handling a large transactions that would be hard or impossible for the entities involved to handle individually, which allows companies to pool their resources and share risks and returns. In regards to apartments and hotels, a syndication is typically a partnership between general partners (i.e. the syndicator) and limited partners (i.e. the passive investors) to acquire, manage and sell the asset while sharing in the profits. 

The threshold return that limited partners are offered prior to the general partners receiving payment. 

A document that outlines the terms of the investment and the primary risk factors involved with making the investment. Also referred to as the PPM. The PPM typically has four main sections: the introductions (a brief summary of the offering), basic disclosures (general partner information, asset description and risk factors), the legal agreement and the subscription agreement. 

A person who is deemed to have sufficient investing experience and knowledge to weigh the risks and merits of an investment opportunity. 

An apartment community or hotel that has an opportunity to be improved by adding value, which means making improvements to the operations and the physical property through exterior and interior renovations in order to increase the income and/or decrease the expenses. 

The process of financially evaluating an apartment community to determine the projected returns and an offer price.