Apartment or multifamily syndication can be complicated, for any new syndicators or passive investors. In this article, we will breakdown the top 40 apartment syndication terms you must know as an investor and getting plugged into the power of apartment syndications!

Accredited Investor

An accredited investor is an individual who qualifies to invest in real estate syndications by satisfying one of the requirements for of an annual income of $200,000—or $300,000 for joint income—or a net worth of at least $1 million (not including primary residence).

Acquisition Fee

Compensation earned by the general partner in a syndication for sourcing, screening, arranging financing, and closing on a investment asset.

Active Investing

This is the opposite of passive investing. An active investor does all the work of finding, structuring, managing, and exiting investments.

Asset Management Fee

Typically a recurring fee paid from property revenues to the general partner for asset management.

Bridge Loan

Typically short-term loans enabling investors to leverage equity in one property to finance another or access cash for a down payment on a new acquisition.

Capital Expenditures

These expenses are funds used by the managing company or partners to acquire, improve, or maintain a property. Also referred to as CapEx. It specifically applies to when these funds improve the useful life of a property.

Capitalization Rate

Calculated by dividing net operating income by current market value of a property to determine an expected rate of return.

Cash Flow

Remaining liquid profit after deducting operating expenses and any debt service payments.

Cash-on-Cash Returns

A rate of return calculated by dividing the cash flow being produced by a property by the initial cash investment.

Closing Costs

Costs required to close on a real estate or financing transaction. May include origination, application, processing, underwriting, appraisal, and recording fees.

Debt Service

The amount of loan payments required to be paid back to a lender. Also used to calculate the DSCR for qualifying for commercial real estate financing.

Debt Service Coverage Ratio

The DSCR is the the ratio commercial mortgage lenders use to evaluate and qualify a deal for financing. The DSCR measures how much cash flow will be available to cover debt service. A DSCR ratio of 1 means the cash flow should cover the debt payments. Lenders typically expect a minimum DSCR of 1.2 in order to get a loan. A better ratio may qualify the borrow for better terms.


These are the funds paid out to investors. These profits may be paid monthly or quarterly or upon a successful exit.

Due Diligence

Due diligence describes a group of tasks to screen and evaluate a property and to satisfy lender underwriting requirements. May include appraisals, surveys, inspections, and title work.

Effective Gross Income

The EGI is the effective income derived by subtracting losses due to vacancy, concessions, employees, model units, and any bad debt.

Equity Investment

The cash put into an investment. In an apartment building syndication this capital may be used toward the down payment, closing costs, borrowing costs, funding an operating account funding, along with any compensation earned by the general partners.

Equity Multiple (EM)

The EM is a way to calculate a rate of return on commercial investment property. This is calculated by dividing the total cash distributions (cash flow and cash on exit) by the equity investment made.

Exit Strategy

This is how the syndicator plans to cash investors out of their investment in the future. This may be by selling the property, purchasing their shares, or refinancing them out.

General Partner (GP)

In apartment syndications, the general partner is responsible for managing the entire apartment syndicate. Sometimes general partners are referred to as the sponsor or syndicator.

Gross Potential Rent

The hypothetical amount of revenue if the apartment community was leased at 100 percent occupancy year-round at market rental rates. Also known as “GPR.”

Gross Potential Income

The potential income a multifamily property could produce if it had no vacancies and all leases were signed at market rates—plus any other revenue.

Gross Rent Multiplier

This calculation shows the number of years it would take for the property to pay for itself based upon the gross potential rent. This is calculated by dividing the property purchase price by the annual gross potential rent.

Internal Rate of Return

The IRR is calculated based on all future anticipated cash flow, principal pay down of debt, and proceeds on the exit of a property.

Limited Partner

In contrast to the general partner, a limited partner’s liability is limited to the extent of their share of ownership. In a typical real estate syndication, a limited partner is a passive investor who puts in capital.

London Interbank Offered Rate

The LIBOR is a benchmark interest rate that is often used to calculate loan rates and interest rate adjustments on a variable rate loan.

Loss-to-Lease (LtL)

LtL, calculates the revenue loss on a building based on subtracting the actual rent collected by the gross potential rent divided by gross potential rent.

Net Operating Income

The NOI of a property is calculated by adding up all of the incoming revenue from a property and subtracting the operating expenses.

Non-Recourse Loan

A non-recourse loan is a loan on which the borrower is not personally signing a guarantee. The lender generally has no recourse to pursue the borrower in a default, beyond the pledged real estate collateral the loan was made on.

Operating Expenses

Operating expenses are what it costs to run and maintain an investment property. In apartment syndications, these operating expenses usually include payroll, maintenance, repairs, contractors, marketing, admin, utilities, management fees, property taxes, insurance, and capital reserves.

Offering Memorandum

Also known as the private placement memorandum, this document lays out the risks, terms, and objectives of an investment, as well as documents the syndicators’ business operations and conditions.

Passive Investing

The strategy of placing your capital into a real estate syndication that is managed for you.

Preferred Return

Investors with preferred shares or preferred returns receive their distributions and returns up to an agreed upon percentage before the sponsor. This holds them accountable and ensures interests are aligned.


A projected financial statement for estimated revenues and expenses. Often detailed for one and five years.

Rent Roll

The spreadsheet or document detailing each of the units in an apartment community. A good rent roll will include unit numbers, unit types, square feet, tenant names, market rents versus actual rent, deposit amounts held, move-in dates, lease-start and lease-end dates, and current status.

Sales Comparison Approach

The typical method for estimating a property’s value based on recent similar sales in the area.

Sophisticated Investor

A individual “determined” to have enough experience and knowledge to assess the risks and merits of an investment opportunity for themselves.


Apartment syndications are essentially real estate partnerships pairing passive investors, capital, and a syndicator (sponsor or active partner and promoter) who organizes the deal, puts it together, and manages it.

Subscription Agreement

A document that is a promise by the LLC that owns the property to sell a specific number of shares to a limited partner at a specified price—and a promise by the limited partner to pay that price.


A T12 is a profit and loss statement showing the actual reported numbers for the last 12 months.


A process of evaluating an apartment building community to determine the status, value, risks, and potential.

Sign Up To Our Newsletter

 Subscribe now to get updates, new investment opportunities and education for multifamily investing.