Intermediate1 hour8 terms

REI Capital Contribution Terminology Guide

Explore a curated collection of key terms related to contributed capital in real estate investment. This guide clarifies commonly referenced concepts you may encounter when structuring deals or analyzing investment opportunities. It's designed to be a helpful reference for understanding how capital is raised and deployed.

Term Collection

Equity Investment

Equity investment in real estate involves directly owning a portion or all of a property, providing the investor with an ownership stake and the potential to benefit from appreciation and rental income.

Beginner3-4 min

Waterfall Distribution

Waterfall distribution is a tiered profit-sharing structure in real estate syndications, dictating how cash flow and profits are allocated among investors and sponsors based on predefined hurdle rates and preferred returns.

Advanced13-16 min

Capital Call

A capital call is a formal request by a fund manager for investors to contribute a portion of their previously committed capital to an investment fund or syndication, typically to fund new acquisitions or project expenses.

Intermediate12-15 min

General Partner

A General Partner (GP) is the active manager in a real estate limited partnership or syndication, responsible for all operational and strategic decisions, and traditionally bearing unlimited personal liability for the partnership's obligations.

Intermediate12-15 min

Limited Partnership

A business entity composed of at least one general partner (GP) who manages the business and assumes unlimited liability, and at least one limited partner (LP) who contributes capital but has limited liability and no management authority.

Intermediate14-18 min

Real Estate Syndication

Real estate syndication is a private equity strategy where multiple investors pool capital to acquire and manage large-scale real estate assets, typically led by a sponsor (General Partner) for passive Limited Partners.

Advanced14-15 min

Internal Rate of Return

The Internal Rate of Return (IRR) is a sophisticated financial metric used in capital budgeting to estimate the profitability of potential investments, representing the discount rate at which the net present value (NPV) of all cash flows from a particular project equals zero.

Advanced15-18 min

Carried Interest

Carried interest is a share of the profits of an investment fund, typically a private equity real estate fund or syndication, paid to the general partners (GPs) or managers after limited partners (LPs) have received their initial capital and a preferred return.

Advanced13 min