Reference library
Investment terms
Use this glossary when a metric appears in a project memo, portal report, or distribution update.
Return metricsProperty metricsStructure and cash flow
Return metrics
How your gain is measured. Read a time-based metric (IRR) together with a total-return metric (equity multiple) — one alone can mislead.
IRR
Internal Rate of Return
Meaning
The annualized rate of return on your money that accounts for the timing of every cash flow — when money went in and when it came back.
Why it matters
It is the best single number for comparing deals of different lengths, because a dollar returned next year is worth more than a dollar returned in five years. Two deals with identical total profit can have very different IRRs.
Calculation logic
It is the discount rate at which the value of all the cash you put in equals the value of all the cash you get back. Earlier distributions and a faster sale push IRR up.
Meaning
The same idea as IRR, but for a deal that has not sold yet — so it also counts today’s estimated value of your stake as if it were cash paid out.
Why it matters
It lets you see a projected annualized return mid-deal. But part of it rests on an estimate, not realized cash, so it can move up or down as the estimate changes.
Calculation logic
Same math as IRR, using your real contributions and distributions plus the current estimated value (NAV) as a final, as-if cash-out.
Meaning
The cash you actually receive in a year, as a percentage of the cash you put in.
Why it matters
It measures the current income your investment throws off right now — how hard your money is working today — ignoring any future gain at sale.
Calculation logic
Annual cash distributions ÷ your invested capital. An $8,000 yearly distribution on $100,000 invested is an 8% cash-on-cash return.
MOIC
Equity Multiple (Multiple on Invested Capital)
Meaning
The total value you receive for every dollar invested, over the entire life of the deal.
Why it matters
It answers “how many times did I get my money back?” — 2.0x means you doubled your money. Unlike IRR it ignores timing, so read it alongside IRR.
Calculation logic
(Total distributions + any remaining value) ÷ total invested. A long hold can produce a strong multiple even with a modest IRR.
DPI
Distributions to Paid-In
Meaning
The cash actually returned to you so far, per dollar invested.
Why it matters
This is the “cash in hand” part of your return — money you have truly received, not an estimate. 1.0x means all your original money is back in cash.
Calculation logic
Total cash distributions ÷ total invested. As a deal matures and sells, DPI climbs toward the final equity multiple.
TVPI
Total Value to Paid-In
Meaning
Cash you have received plus today’s estimated value of your remaining stake, per dollar invested.
Why it matters
It shows your total return so far, including value not yet realized. TVPI = DPI (cash) + estimated value still in the deal; the gap between TVPI and DPI is the part that is still an estimate.
Calculation logic
(Distributions + current estimated value) ÷ total invested.
NAV
Net Asset Value (estimated value)
Meaning
The sponsor’s good-faith estimate of what your stake is worth today.
Why it matters
It is how unrealized value is measured before a sale. It is an estimate, not a guarantee, and not cash you can withdraw — the real number is only known when the property actually sells.
Calculation logic
Usually the property’s estimated market value minus its debt, times your ownership share. Early on it is often simply held at cost (what you paid).
Property & deal metrics
How we judge the asset itself and the price. In commercial real estate, value is driven mostly by net operating income (NOI).
Meaning
The property’s rental income after operating expenses, but before mortgage payments and income tax.
Why it matters
It is the core measure of what the property itself produces. Value is driven mostly by NOI: raise NOI and you raise what the property is worth.
Calculation logic
Effective rental income − operating costs (property taxes, insurance, utilities, repairs, management). Loan payments are NOT subtracted.
Cap rate
Capitalization Rate
Meaning
A property’s annual net operating income as a percentage of its price.
Why it matters
It is the quickest way to compare what you pay for income across deals, independent of loans. A higher cap rate means you pay less for each dollar of income — often more risk or more work.
Calculation logic
NOI ÷ price. A $200,000 NOI on a $2,600,000 price is a 7.7% cap rate.
Going-in cap
Going-in Cap Rate
Meaning
The cap rate based on the property’s as-is income at the moment you buy it.
Why it matters
It is the immediate yield before you improve anything — the starting point of the deal. The plan is usually to raise income so the price you paid looks cheaper over time.
Calculation logic
In-place (trailing-12-month) NOI ÷ purchase price.
Meaning
The share of lots (or homes) that are filled and paying rent.
Why it matters
It is the clearest signal of income stability and demand. Steady high occupancy means dependable cash flow; low occupancy is both a risk and an opportunity to add value by filling lots.
Calculation logic
Occupied paying lots ÷ total lots. 62 of 72 lots is 86% occupancy.
Meaning
In-place rent is what current residents actually pay; market rent is what comparable communities charge today.
Why it matters
The gap between them (“loss-to-lease”) is built-in upside — how far rent could rise toward market without being above market. It is a key driver of the business plan.
Calculation logic
Monthly upside per lot = market rent − in-place rent. Multiply by lots × 12 for the annual income opportunity.
Meaning
The share of income eaten up by operating costs.
Why it matters
It shows how efficiently the community runs and where NOI can be improved (for example by billing utilities back to residents). Lower is better, all else equal.
Calculation logic
Operating expenses ÷ gross income. Mobile home parks often run lower than apartments because residents usually own and maintain their own homes.
Meaning
The purchase price divided by the number of lots.
Why it matters
It is a fast sanity check on what you are paying, comparable across parks of different sizes, and easy to benchmark against replacement cost and recent sales.
Calculation logic
Purchase price ÷ lots. $2,600,000 for 72 lots is about $36,000 per lot.
Structure, roles & cash flow
Who does what, and how money moves between the deal and you.
Meaning
The sponsor who finds, buys, finances, and runs the deal and the property.
Why it matters
The GP makes the decisions and does the work, so their skill and alignment are a big part of your risk. GPs usually invest their own money too and earn a share of profits (a “promote”) for hitting targets.
Calculation logic
The GP signs on the loan, executes the business plan, and reports to investors.
Meaning
An investor — you — who contributes capital but does not run day-to-day operations.
Why it matters
LPs get the benefits of ownership (income, appreciation, tax treatment) with limited liability and no operating workload. In exchange, you rely on the GP to execute.
Calculation logic
Your economics are set by your ownership share and the deal’s profit-sharing terms.
Meaning
Your share of the project’s equity.
Why it matters
It determines your slice of every distribution and of the final profit. During a raise, ownership stakes may not add up to 100% yet — the rest is still being allocated to incoming investors.
Calculation logic
Roughly your invested capital ÷ total equity raised, subject to the deal’s terms and any GP promote.
Meaning
Money you pay into the project when capital is called.
Why it matters
It is your cost basis — the denominator behind most return metrics. Get this number right and every multiple and rate makes sense.
Calculation logic
Usually called at closing, sometimes in stages as the plan needs cash.
Meaning
Your running balance of capital still invested in the project.
Why it matters
It helps separate profit from returned principal. Investors and accountants use it to understand how much original capital is still at work after distributions and returns of capital.
Calculation logic
Total contributions minus return-of-capital payments. Ordinary profit distributions usually do not reduce the capital account unless they are specifically classified as capital returned.
Meaning
Cash the project pays out to you — usually from operating profit during the hold and a larger payout at sale.
Why it matters
It is your actual return in hand. Both the size and the timing of distributions drive your IRR and cash-on-cash.
Calculation logic
Often paid quarterly during the hold, with a final distribution when the property is sold or refinanced.
Meaning
A payment that gives back part of your original investment (not profit) — for example after a refinance.
Why it matters
It lowers your remaining invested balance and boosts IRR by getting your money back sooner, while you keep your ownership and future upside.
Calculation logic
Reduces your capital account; it is generally not taxed as income, unlike profit distributions.
Meaning
The U.S. tax form the partnership sends you each year showing your share of income, deductions, and depreciation.
Why it matters
You use it to file your taxes. Real-estate depreciation often makes taxable income much lower than the cash you received — a key tax benefit of this kind of investing.
Calculation logic
Issued once a year by the partnership; hand it to your accountant.
Meaning
The financial analysis used to decide whether a deal is worth doing, and at what price.
Why it matters
Good underwriting is conservative and stress-tested — it is where the return projections and the business plan come from. Always ask what assumptions drive the numbers.
Calculation logic
Builds a model from the seller’s data (T12, rent roll), market comparables, and a business plan to project NOI, cash flow, and returns.
This page is educational only and does not provide legal, tax, or investment advice. Offering documents control the actual terms of any investment.