Glossary
The terms you will meet on every listing, explained in plain English with a worked example on each page.
Returns & Metrics
Appreciation
The increase in a property's value over time. Realised only when the property is sold or refinanced.
Cap Rate
Net operating income divided by property value. Higher cap rates generally indicate higher risk and potential returns.
Cash-on-Cash Return
Annual cash distributions divided by the cash you invested. The yearly income return on your actual outlay.
Dividend Yield
Annual dividends paid divided by share price. Represents the income return on an investment.
Equity Multiple
Total cash returned divided by total cash invested. A 2.0x multiple means you got back twice what you put in.
IRR
Internal Rate of Return - a metric used to estimate the profitability of an investment over time.
Net Operating Income
Rent and other income minus the costs of running the property, before debt and taxes. The number every valuation starts from.
Net Yield
Rental income after all costs, as a percentage of the price. The figure to compare against gross yield on the same listing.
Ownership & Structure
Fractional Ownership
Owning a share of a single property alongside other investors, with income and any sale proceeds split in proportion.
REITs
Real Estate Investment Trusts - companies that own income-producing real estate and allow investors to buy shares.
Secondary Market
A place to sell your shares to another investor before the property itself is sold. Some platforms run one, many do not.
Special Purpose Vehicle
A company created to hold one property and nothing else. Your fractional share is a share in this company.
Sponsor
The party that finds, buys and runs a property on behalf of the investors, and is paid to do it.
Syndication
A group of investors pooling money to buy a property under one sponsor. The traditional form of fractional real estate.
Tokenization
The process of converting property ownership into digital tokens on a blockchain, enabling fractional ownership.
Regulation & Access
Accredited Investor
An individual meeting certain income or net worth thresholds, qualifying them for certain private investments.
KYC
Know Your Customer. The identity check every regulated platform runs before you can invest.
Lock-up Period
The time after buying during which you cannot sell or redeem your shares, whatever the market does.
Regulation A+
A US securities exemption that lets a company raise up to $75 million from the general public, accredited or not, with a reviewed offering document.
Regulation Crowdfunding
A US exemption that lets a company raise up to $5 million a year from the public through a registered funding portal, with limits on how much each person can invest.
Regulation D
The US private placement exemption behind most syndications and accredited-only fractional deals. No cap on the raise, but limits on who can buy.
Property & Operations
Capital Reserve
Cash set aside from the purchase or from rent to pay for large repairs. Money that is yours but not distributed.
Hold Period
How long the sponsor plans to own the property before selling it and returning capital. Usually five to ten years for fractional listings.
Loan-to-Value
The mortgage on a property as a percentage of its value. Zero for an all-cash purchase, 60 to 75% on a typical leveraged deal.
Management Fee
What the property manager and the platform charge to run the property and the investment. The main gap between gross and net.
Occupancy Rate
The share of a property's units, or of the year, that is rented and paying. The assumption every yield depends on.