Glossary

A

Abatement

The act of reducing something such as a taxes or rent for some period of time or of eliminating something permanently.

Absorption

An estimate of the new occupancy, or amount of inventory that is being “absorbed,” of a particular type of land use. Gross absorption is a measure of the total square feet leased over a specified period with no consideration given to space vacated in the same geographic area during the same time period.

Acceleration Clause

A term in a loan agreement that requires the borrower to pay off the loan immediately under certain conditions. In the absence of such a clause, then a default on one payment would be just that: only one payment in default. Acceleration clauses make the full amount of principal due (immediately, or after a short grace period) upon the default as specified in the loan documents.

Accredited (Investor)

An accredited investor is a term used by the Securities and Exchange Commission (SEC) under Regulation D to refer to investors who are financially sophisticated and have a reduced need for the protection provided by certain government filings. Accredited investors include individuals, banks, insurance companies, employee benefit plans, and trusts. As per federal law, a natural person with either $1,000,000 or more in net worth (excluding primary residence) or $200,000 annual income (or $300,000 with spouse) for past two years and reasonable expectation of same for current year.

Accrue

Accrue is a benefit or sum of money being received by someone in regular or increasing amounts over time: In finance, “accrue” is most commonly used when referring to interest, income and expenses of an individual or business.

Adjustable-Rate Mortgage (ARM)

Adjustable-Rate Mortgage in short ARM is a mortgage on which the interest rate is not fixed for the entire life of the loan. The rate is fixed for a period at the beginning, called the “initial rate period,” but after that it may change based on movements in an interest rate index.

Adjusted Tax Basis

The net cost of an asset after adjusting for various tax-related items and such reduced and adjusted basis is referred as Adjusted Tax Basis. In real estate terms, this is generally the original cost of property (the original tax basis) less any depreciation deductions plus any capital expenditures. The adjusted tax basis is important when determining final taxes (and tax rates) upon the sale of a property.

Amortization

Amortization is the paying off of debt with a fixed repayment schedule in regular installments over a period of time. Each repayment installment of an amortizing loan consists of both principal and interest.

Anchor Tenant

Anchor tenant is a major or key tenant is one of the larger stores in a shopping mall or shopping center. These stores are “destination” stores and provide exposure to smaller, satellite stores

Ancillary Tenant

A shopping center tenant that occupies a smaller space and is less of a draw than an anchor tenant. Ancillary Tenants typically pay higher rents relative to anchor tenants.

Angel (Investor)

An Angel investor is a prosperous individual who provides capital for a business start-up, usually in exchange for an equity ownership interest. The term “angel” arose in the entertainment industry, where investors would bankroll a production for a share of the profits.

Appreciation

An increase in an asset value is referred to as “appreciation”.

Appraisal

An estimate of value, generally made by a professional appraiser who uses their knowledge of the local area and recent sales in that area and concludes to provide a guide as to the price that might be obtained for a particular property. An appraisal of a property might be made not only to determine a reasonable offering price in a sale, but also to determine an appropriate loan size of a loan, to allocate a purchase price between land and building (improvements), to determine an appropriate amount of hazard insurance, or for estate tax purposes at the owner’s death.

As Is

Without Guarantees as to condition, as in a sale. May signal a problem in condition, or may merely indicate that the seller is not in a position to attest as to the property’s condition (as in a sheriff’s sale following a foreclosure). Premises must be accepted by a buyer or tenant as they are, including physical defects (other than hidden — or latent — defects).

Assumable Loan

A mortgage loan that allows a new purchaser to undertake the obligation of the loan with no change in loan terms. This is generally true of loans without due-on-sale clauses. Most FHA and VA mortgages are assumable.

Audit

An audit is a professional and independent examination of a company’s financial statements and accounting documents following generally accepted accounting principles (GAAP). Under the JOBS Act, companies that look to raise over $500,000 must have audited financial statements. This is not like an audit from the IRS, which by contrast, is an examination of a taxpayer’s return to verify whether the proper amounts of taxes have been paid.
B

Balance

The amount left over after subtracting the amount owed (on a loan) or the amount remaining (in an account).

Balloon Payment

A balloon payment mortgage is a mortgage which does not fully amortize over the term of the note, thus leaving a balance due at maturity. Example: A debt requires interest-only payments annually for five (5) years, at the end of which time the principal balance (a balloon payment) becomes due.

Basis (Tax)

The point from which gains, losses, and depreciation deductions are computed. Generally the cost, or purchase price, of an asset.

Basis Point

A basis point is a unit of measure used in finance to describe the percentage change in the value or rate of a financial instrument. 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%, and similarly a 1% change is equal to a 100 basis point change.

Blind Pool

An investment program in which funds are invested into an entity without investors knowing which properties will be purchased.

Bridge Loan

A bridge loan is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger loan or longer-term financing.

Broker Price Opinion

The estimated value of a property as determined by a real estate broker or other qualified individual or firm. A broker price opinion is based on the characteristics of the property being considered.. A fee may be charged for this service, but it may not be represented as an appraisal. While lenders typically require an appraisal for mortgage lending purposes, some (particularly in the asset-based lending sector) may be content with a broker’s price opinion.

Broker-Dealer

A broker-dealer is a person or company that is in the business of buying and selling securities—stocks, bonds, mutual funds, and certain other investment products—on behalf of its customers (as broker), for its own account (as dealer). In reference to “Crowdfunding,” one of the two types of “Intermediaries” (“Portals” being the other) authorized by the “JOBS Act” to handle the sale of crowd-funded securities (i.e. equity or debt instruments) by an “issuing company”. Broker-dealers are regulated by the federal Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA) (a “Self-Regulatory Organization” or “SRO”), and sometimes the various states.

Buy and Hold

In real estate, Buy and Hold is an investment strategy whereby an investor purchase and property and holds it for a long period of time, typically using the property for rental income. “Buy and hold” investments can be contrasted to “fix and flip” purchases, where investors seek only to make some basic repairs or improvements and then to sell the property as quickly as possible.

Buy-Sell Clause

An agreement among partners, LLC members, or stockholders in which some partners / members / stockholders agree to buy the interests of others, upon some event.

Blue Sky Laws

State specific regulations in the United States meant to protect investors from fraud. These laws vary from state to state, but in general they require the registration of all securities offerings and sales with each state’s appropriate regulatory agency. Some SEC registration exemptions, such as Registration A Tier 2 offerings, pre-empt blue sky laws. That means if a securities offering adheres to the SECs requirements it does not have to register and comply with different blue sky laws in every state.
C

Capital

Capital is any financial asset or the value of an asset.

Capitalization (Cap) Rate

Cap Rates measure a property’s yield (return) in a one-year time frame.

Capital Call

A request made to existing equity owners for additional money in order to fund deficits due to construction or operating costs.

Capital Gain

Gain on the sale of a capital asset like real property. Capital gains enjoyed on assets held for a long term (generally at least one year) often enjoy lower tax rates than ordinary income.

Cash Flow

Periodic payments available after deducting all other expenses applicable to rental income, including operating and financing expenses. Can be contrasted with net operating income, which deducts from gross rental income the various operating expenses, but which does not also factor in the effect of financing expenses.

Cash on Cash Return

The cash on cash return is a simple ratio measurement of an investor’s return in relation to the cash actually invested. The cash on cash ratio is determined by dividing the before-tax cash flow (net operating income less debt payments) and dividing it by the initial equity investment.

Commercial Property

Property designed for uses other than personal residential purposes, often times related to business activity. Commercial property includes (among other things) retail shopping centers, multi-family apartment buildings, office buildings, hotels and motels, and self-storage facilities.

Comparative or Competitive Market Analysis

An estimate of the value of a property using some indicators taken from sales of comparable properties (such as price per square foot). These value estimates, similar to a broker’s price opinion, are not appraisals and do not meet the standards of appraisal as defined by regulatory bodies.

Compound Interest

Interest paid on the original principal and also on any accumulated (accrued) and unpaid interest. Each year, interest is received on previously earned but undistributed interest, so interest compounds.

Credit Report

The report is a record that contains the detailed information on a person’s financial history, and an evaluation of a person’s capacity of debt repayment. Generally available for individuals from credit repayment histories and similar institutionally reported data.

Credit Score

Credit score refers to FICO score, which is created and calculated by the Fair Isaac Corporation and it is a measure of an individual’s creditworthiness. This number predicts the probability that a person will repay a loan. The score is estimated from information contained in the individual’s credit report. The higher the score, the better the risk.

Crowdfunding

Crowdfunding is the process of raising financial support for a venture via smaller amounts from multiple investors (“the crowd”). Crowdfunding without the expectation of financial return, or with the promise of a specific good or service, are termed “donation-based” or “reward-based” crowdfunding, are in the nature of charitable solicitation or business marketing. Soliciting funds in return for an ownership interest or the expectation of repayment are termed “equity-based” or “debt-based” crowdfunding (together grouped as “securities-based” crowdfunding), and until recently effectively prevented by federal and state securities law. One of the most significant parts (Title III) of the federal Jumpstart Our Business Startups, or JOBS Act of 2012 specifically enabled and legalized “security-based crowdfunding,” subject to a variety of regulations and restrictions. Crowdsourcing / Crowd Sourcing: Crowdsourcing is the practice of engaging a ‘crowd’ or group for a common goal — often innovation, problem solving, or efficiency. Participants collectively contribute ideas, time, expertise, or funds to a project or cause.
D

Distributions

Payments made to investors periodically, typically over the course a calendar year, either from profits or interest payments.

Debt

An amount of money (obligation) owed by one party (the debtor) to another party (the creditor).

Debt Crowdfunding

Obtaining a loan from multiple lenders, often private individuals. The loan money must be repaid with a fixed interest rate in an agreed upon amount of time.

Deed

A written document properly signed and delivered that conveys a title to real property. There are different types of deeds that provide different levels of assurance about the extent of the title being conveyed.

Deed of Trust

A legal instrument used in many states in lieu of a mortgage, where legal title to a property is vested in one or more trustees to secure the repayment of a loan. A deed of trust is an arrangement among three parties: the borrower, the lender, and an impartial trustee

Default

Failure to perform a task or fulfill an obligation, especially failure to meet a financial obligation.

Deficiency

In mortgage finance, a shortfall of funds recovered through the sale of property securing a foreclosed loan compared to the amount of debt, accrued interest, foreclosure expenses, and damages incurred by the lender.

Delinquent

Failure to repay an obligation when due or as agreed. Normally delinquency occurs before a default is declared.

Demographics

The statistical data of a population, especially those showing average age, income, education, etc

Depreciation

Depreciation is permanent and continuing diminution in the quality, quantity or value of an asset. Depreciation refers mainly to tangible assets.

Depreciation Recapture

Depreciation recapture is the gain received from the sale of depreciable capital property that must be reported as income. Depreciation recapture is assessed when the tax basis of an asset exceeds the sale price.

Discounted Cash Flow

A method of investment analysis in which anticipated future cash income from an investment is estimated and converted into a rate of return (generally the internal rate of return, or IRR) based on the time value of money. Alternatively, when a rate of return is specified, a net present value of an investment can be estimated.

Donation Crowdfunding

Donation-based crowdfunding is a way to source money for a project by asking a large number of individuals and businesses to donate a small amount to it. Often donation crowdfunding is most successful among charities and non-profits.

Due Diligence

Due diligence is an investigation or audit of a potential investment. In real estate, this usually refers to the inquiries made in advance of a purchase or investment in a property. Due diligence considers the physical, financial, legal, and social characteristics of a property and its expected investment performance.
E

Encumbrance

A burden, obstruction, or impediment on property that lessens its value or makes it less marketable

Entity

The legal form under which property is owned

Equity

Ownership of a piece of a company as an investment.

Equity Crowdfunding

Funding projects and businesses through investments by people who then receive equity ownership shares in the resulting company, product, or property.

Escrow

A contract, deed, bond, or other written agreement deposited with a third person, by whom it is to be delivered to the grantee or promisee only upon fulfillment of a condition.
F

Fair Market Value

The price that two parties are willing to pay for an asset or liability. The fair market value is the theoretical highest price that a buyer would pay, and the lowest price a seller would accept, assuming that both parties were willing but not compelled to act.

FICO Score

A FICO score, created and calculated by the Fair Isaac Corporation, is a measure of an individual’s creditworthiness. It is a mathematical summary of the information on a person’s credit report.

First Lien (Mortgage or Deed of Trust)

A lien (often a deed of trust or a mortgage) that has priority over all other liens. In cases of foreclosure, the first mortgage will be satisfied before other mortgages.

Fix and Flip

A type of real estate investment strategy in which an investor purchases properties requiring some immediate repairs, which when made will hopefully translate into a more valuable property that can quickly be re-sold at a profit. This strategy can be contrasted to a “buy and hold” approach where the property is held for a longer period.

Foreclosure

Legal process by which a lender forecloses a borrower’s right of redemption of the mortgaged property.

Free Cash Flow (FCF)

Free cash flow is a measure of a property’s ability to generate cash after setting aside reserves for capital expenditures such as future development, tenant improvements, and leasing commissions.
G

General Solicitation

The practice of advertising to potential investors outside of one’s current network with the intent of fundraising, as is now allowed by the SEC for private issuers under particular registration exemptions enabled in the JOBS act

General Partner

A member or partner in a partnership who has unlimited liability and is liable for his portion of all partnership debts. All partners in an ordinary partnership are general partners, while in a limited partnership most members enjoy limited liability (although one partner must still be a general partner).

Green Building

A building that is built or developed specifically to minimize utility costs or to maximize positive environmental considerations (i.e. to reduce damage to the environment).

Gross Amount

Gross refers to the total amount before anything is deducted. When deductions are taken, the amount is net.

Ground Lease

A long-term lease of land in which the tenant will erect improvements at its own expense.

Guaranteed Investment

As defined by Zeus CrowdFunding: Guaranteed Investments pay a lower rate of return, but guarantee the investor protection from loss of principle. All Zeus Crowdfunding investments are protected by first liens and personal guarantees. Contrast to Non-guaranteed Investment.

Guaranty

An assurance provided by one party that another party will perform under a contract.
H

Hard Asset

Hard assets often refer to items such as buildings, cash or other tangible and tradable assets. Hard assets are considered particularly valuable because they can be used to produce, purchase, or trade for other goods or services.

Holdback (Reserve)

Money not paid until certain events have occurred, such as a retained amount on a loan involving construction work.
I

Investment Crowdfunding

Investing in a company or project via crowdfunding in exchange for equity ownership, debt payments, a convertible note, or some other financial return.

Intermediary

Either a “Broker-Dealer” or a “Portal,” both allowed by the JOBS Act to consummate a securities-based crowdfunding transaction.

Illiquid Asset

Illiquid describes an asset or security that cannot be sold quickly due to a shortage of interested buyers or a lack of an established trading market. Illiquid assets cannot be easily converted into cash without potential for losing a significant percentage of their value.

Improvements

Additions to raw land that tend to increase the property’s value; similar to developments. Improvements include not only buildings but also public enhancements such as streets and sewers.

In-Fill Development

Improvements on a land adjacent or between existing developments. A way to accommodate increased population in an area without spreading the outer boundaries of development.

Income Property

Real estate developed or bought for the purposes of generating income (usually rental income). Multi-family apartment buildings, retail shopping centers, office buildings, industrial properties, resort and recreational properties, self-storage facilities, and hotels are all considered income properties.

Industrial Property

Industrial properties include manufacturing facilities, warehouses, distribution centers, and research & development space. Manufacturing and R&D properties tend to be build-to-suit buildings that can be difficult to “re-tenant” without extensive modifications, while warehouses and distribution centers can be more generic buildings. Industrial properties tend to have long leased terms.

Inflation

A loss in the purchasing power of money; an increase in the general price level. Generally they are measured by the Consumer Price Index (CPI), a statistic published by the U.S. Bureau of Labor Statistics.

Intrastate Crowdfunding

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 crowdfunding have moved to legalize intrastate – or in state – crowdfunding.

Internal Rate of Return (IRR)

Internal rate of return (IRR) is the interest rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equal zero. Internal rate of return is used to evaluate the attractiveness of a project or investment

Issuer

The term issuer refers to a legal entity, i.e., government, corporation, or investment trust that develops, registers, and sells securities to the investing public in order to finance its own operations.
J

JOBS Act:

The JOBS Act (Jumpstart Our Business Startups Act) is legislation that eases regulatory restrictions for new businesses to make it easier for startups to get established.

Judicial Foreclosure

A foreclosure which results from a court action rather than from the power of sale given to a trustee. Judicial foreclosures occur when a trust deed or mortgage deed does not have a power of sale clause, thus compelling the lender to take the borrower to court.
K
L

Letter of Intent (LOI)

A letter from between parties acknowledging a willingness and ability to do business.

Limited Liability

Limited liability is where a person’s financial liability is limited to a fixed sum, most commonly the value of a person’s investment in a company or partnership.

Limited Liability Company (LLC)

A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The “owners” of an LLC are referred to as “members.” Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations, or other LLCs.

Limited Partnership

A special type of partnership which is very common when people need funding for a business, or when they are putting together an investment in a real estate development. A limited partnership requires a written agreement between the business management, who is the general partner, and all of the limited partners.

Liquidity

The ease with which assets may be converted into cash.

Loan-to-Value Ratio (LTV)

A Loan to value ratio of how much is being borrowed to the value of the property.

Loan-to-Cost Ratio (LTC)

The loan-to-cost ratio is defined as the ratio of the construction loan to the total cost of a construction project.
M

Market Area

A market area is the geographic region where a specific good or service is offered for sale. The market area, or trade zone, differs from business to business based on demand, sales goals, and marketing techniques

Maturity

The due date of a loan.

Mezzanine Debt vs. Preferred Equity

Mezzanine Debt is generally a loan that is secured by a property and senior to any equity, but junior to the senior loan on the property. Preferred Equity, on the other hand, is an equity investment in the property-owning entity. It is not secured by the property but rather by an interest in the entity investing in (or owning) the property.

Mezzanine Financing

High-yield debt issued in connection with a leveraged buyout. Mezzanine Financing is listed on a company’s balance sheet as an asset. Some companies use mezzanine financing because it makes it easier for them to obtain financing from other sources.

Multi-Family Housing

A building or structure that is designed to house several different families in separate housing units. The most common type of multifamily housing is an apartment building. Duplexes, quadruples, and some townhomes also qualify as multifamily housing.
N

Net Operating Income

Net operating income (NOI) is a calculation used to analyze real estate investments that generate income. Net operating income equals all revenue from the property minus all reasonably necessary operating expenses.

Net Worth

Net worth is the difference between the assets and the liability of an individual or a company.

Non-guaranteed Invesment

As defined by Zeus CrowdFunding: Non-guaranteed Investments pay a higher rate of return, but the principle is more at risk. All Zeus Crowdfunding investments are protected by first liens and personal guarantees. Contrast to Guaranteed Investment.

Nonrecourse

Nonrecourse debt or a nonrecourse loan is a secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable.

Note

Sometimes referred to as a promissory note, a note is a written document that evidences a debt and a promise to pay. The note is usually a separate document from the mortgage (or deed of trust), which pledges the designated property as security for the debt.
O

Occupancy Rate

The percentage of total units that are currently rented.

Office Building

A structure used primarily for the conduct of business relating to administration, clerical services, consulting, and other client services not related to retail sales. Office buildings can hold single or multiple firms.

Operating Expenses

An expense incurred in carrying out an organization’s day-to-day activities, but not directly associated with production.

Opportunistic

An aggressive (or more risky) investment strategy that in real estate generally signifies investing in properties that require a high degree of rehabilitation in order to eventually earn “market” rental rates. Properties requiring a greater amount of repairs, or rehabilitation, are generally considered “high risk,” because the property has not yet proven whether it can indeed earn the rents that are forecast for it when it will be improved to the desired state.

Ordinary Income

Ordinary income is income that is taxed at ordinary income tax rates and does not qualify for capital gains tax treatment. It’s important to understand the difference between ordinary income and capital gain income because, generally, ordinary income tax rates are higher than capital gains tax rates. Income such as salaries, interest payments, dividends, and many other items are considered ordinary income.

Origination Fees

A fee charged by a lender to a borrower on initiation of a loan, often as a percentage of the total principal.
P

Partition

The division of real property between those who earlier owned it together with an undivided interest.

Pre-Sales Crowdfunding

Pre-Sales Crowdfunding is an offset of rewards Crowdfunding. It is most associated for a new product or invention where the company looking for funds will promise the contributor a sample of the product on completion in exchange for a minimum payment.

Peer to Peer (P2P) Lending

Peer-to-peer lending (P2P) is a method of debt financing that enables individuals to borrow and lend money – without the use of an official financial institution as an intermediary

Personal Liability

An individual’s responsibility for a debt. Most mortgage loans on real estate are recourse, meaning that the lender can look to the property and to the borrower for repayment. This can be contrasted to nonrecourse loans, where a lender can only look to the security (the pledged property) for repayment

Portfolio

A group of investment assets.

PIPR (Private Issuer Publicly Raising)

A company raising money from investors taking advantage of Regulation D Rule 506(c) which allows general solicitation to the public.

Portfolio Diversification

Portfolio diversification is the means by which investors minimize or eliminate their exposure to company-specific risk, minimize or reduce systematic risk and moderate the short-term effects of individual asset class performance on portfolio value.

Private Offering

An offering of a real estate security that is exempt from registration with state or federal regulatory agencies because it does not involve a public offering. It’s typically made to a small group of investors. Private offerings must adhere to the rules of any one of several SEC registration exemptions.

Prepayment

The payment of a debt in full before it is due. Prepayment is good for the borrower because it relieves him/her of the debt, but it deprives the lender of interest.

Prepayment Penalty

A prepayment penalty, also known as a “prepay” in the industry, is an agreement between a borrower and a bank or mortgage lender that regulates the terms in connection with a prepayment.

Principal

The amount of money raised by a mortgage or other loan that still remains after some of that amount may have been amortized by earlier payments. Principal can be contrasted to the interest paid on the loan.

Priority

Legal precedence having preferred status. Generally, upon foreclosure, lenders are repaid according to priority.

Pro-Forma

A financial model often used in real estate to predict future cash flows and total investment returns.

Promissory Note

Another term for note. A legal document that evidences a debt, specifying how much money is being borrowed and the terms and conditions under which it is to be repaid.
Q
R

Real Estate Crowdfunding

Real estate crowdfunding involves using equity and debt funding to finance real estate purchases using multiple investors.

Recorder

An officer (usually of the local county) appointed or elected to keep records of deeds or other official papers concerning real property that are used to show evidence of title. Sometimes known as the registrar or county clerk.

Recording

The act of entering in a book of public records the legal documents that affect the title to a piece of real property. Recording in this manner gives notice to the world of the facts recorded.

Recourse

The ability of a lender to claim money from a borrower who is in default in addition to the property pledged as collateral.

Refinance

To replace an existing loan(s) with a new loan(s).

Regulation D

Regulation D permits raises of unlimited amounts from accredited investors without registering a public sale through the SEC, as it’ is assumed that accredited investors are financially able to bear the burden of investment decisions without a review by the SEC.

Regulation A+

Regulation A+ is the SEC’s proposed revision of the current Regulation A, which was mandated by the JOBS Act in 2012.

Regulation A

Regulation A allows unaccredited investors to purchase small offerings of securities that do not exceed $5 million in a 12-month period.

Redemption

In the event of back taxes or unpaid liens, a borrower who pays off those debts may reclaim their property, preventing foreclosure or the auctioning of their property.

Real Estate

Real estate includes a parcel of land and any of its permanent structures (buildings, parking lots, etc.).

REIT

A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types regular income streams, diversification and long-term capital appreciation.

Retail Property

Retail property is a classification of zoning for property that is used for a store, shopping center or service business. The retail sector includes everything from smaller neighborhood shopping centers (encompassing, for example, a small grocery, pharmacy and a few restaurants or clothing stores) to large “super-regional” malls that have entertainment activities and can draw shoppers from a great distance.

Risk

Uncertainty or variability; the possibility that returns from an investment will be less than forecast, or that invested principal might be lost.

Risk vs. Return

The risk-return tradeoff is the principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with low potential returns, whereas high levels of uncertainty (high-risk) are associated with high potential returns.

Reward

Something given to investors in exchange for their funds while crowdfunding, either the first run of an actual product, or a shirt, sticker, or small object related to the project or company being funded, or even just a “thank you” acknowledgement.

Rewards Crowdfunding

Rewards based crowdfunding is a collective effort involving a group of people (the crowd, contributors, backers) and a project creator (project owner or campaign manager) to fund a specific venture.

ROI

Return on investment (ROI) measures the gain or loss generated on an investment relative to the amount of money invested.
S

S.E.C. Securities and Exchange Commission.

The part of the United States government that regulates investment and finance, including startups and the various forms of crowdfunding.

Securities

Securities include stocks, bonds, and certificates. These serve as financial and/or investment instruments that hold certain values and that can be bought, sold, and exchanged.

Securities Law

Securities regulation in the United States is the field of U.S. law that covers transactions and other dealings with securities. Generally, Securities Laws are the laws by the federal government (mostly through the SEC) or by each state.

Semi-Liquid Withdrawal Option™

Zeus Crowdfunding offering. Investors should anticipate a 12 – 60 month holding period based on the their selected investment. Should an investor require, they can cash-out or withdraw their full or partial guaranteed investment at anytime with our Semi-Liquid Withdrawal Option™ Zeus Crowdfunding will use commercially reasonable efforts to accommodate the Investor’s request within 90 days of such a request, but shall not be required to borrow money or dispose of assets to fund such a request or take any other action that would, in the sole discretion of the Zeus CrowdFunding, be adverse to the interests of the Company or its other clients. When an Investor requests a withdrawal of all or a portion of the Investor’s guaranteed investment prior to maturity, based on the provisions in this section, then Zeus CrowdFunding may charge a processing fee of no less than $850 per note and reduce the amount returned to the Investor by an amount equal to all the Funding Bonuses paid to the Investor on those funds in the preceding twelve months.

Single Family Residence

In real estate, generally refers to a stand-alone property intended to house one family. Individual apartment or condominium units are usually thought of as being part of a multi-family building, even though individual units are usually occupied by a single family.

Statutory Foreclosure

The foreclosure of a lien on property without using a lawsuit but is based on existing statute. A foreclosure proceeding is not conducted under court supervision; contrast with judicial foreclosure.

Subordination

Moving to a lower priority, as a lien would if it changes from a first mortgage to a second mortgage.

Syndication

The formation of a group of investors, organized by a sponsor, that pools the investors’ capital together in order to make an investment. In real estate, such pools (or syndicates) are often formed because even a single property can require substantial capital, usually beyond the means of a single investor.
T

Tenancy in Common (TIC)

Tenancy in common is a way for two or more people to have equal ownership interests in a property. Each owner has the right to leave his or her share of the property to any beneficiary upon the owner’s death.

Tenancy / Occupancy

Occupancy is generally referred to as a percentage of the total square feet or units leased – it is a building’s revenue source.

Term

The lifespan of a given asset or liability.

Title

In Property Law, a comprehensive term referring to the legal basis of the ownership of property, encompassing real and Personal Property and intangible interests therein.

Title Insurance

Title Insurance covers the loss of an interest in a property due to legal defects and is required if the property is under mortgage. Most title insurance is lender’s title insurance, which is paid for by the borrower but protects the lender.

Transparency

In finance, a manner of doing business such that activities are fully disclosed and reported to investors. Such policies make it possible for potential investors to adequately estimate the risk, and to forecast the income, from investing.
U

Unaccredited Investor

An investor who does not meet the wealth requirements of an accredited investor set forth by the SEC.

Underwrite

Underwriting is the process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities.

Undivided Interest

Ownership claim of property or assets commonly owned with restricted claims but no one has an exclusive claim.
V

Vacancy Rate

The percentage of all units or space that is unoccupied or not rented.

Value-Add

A real estate property categorization, or investment “style,” that refers to properties requiring some degree of improvements to gain increased returns. “Value-add” generally refers to a property that is currently in less than stellar condition and in need of improvements that are of somewhat higher risk, such as performing more-than-usual renovations like upgrading exteriors and interiors and curing deferred maintenance.
W
X
Y

Yield

Another term for the internal rate of return (IRR), a measure of an investment’s return rate that takes account of the time value of money.
Z

Zoning

A legal mechanism for local governments to regulate the use of privately owned real property by applying their power to prevent conflicting land uses and promote orderly development. Designated zones limit the type and intensity of permitted development.

Zeus CrowdFunding

A debt-based real estate crowdfunding platform comprised of proven real estate financing professionals over a decade of success. Zeus CrowdFunding pre-funds all qualified projects and specializes in: Quick Closings, Fix & Flip Real Estate Projects, Fix & Hold Real Estate Projects, Non-Traditional Borrowers, Distressed Properties, Transactional/Gap Financing, Foreclosure/Trustee Sales, Auctioned Properties, Probate Properties Needing Repairs, Refinancing, Temporary to Permanent Financing, any Opportunistic Acquisitions.