Glossary

Common Multifamily Terms

*For Educational Purposes only

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1031 Exchange

A 1031 Exchange is a capital gains tax deferral option in which taxpayers can reinvest the proceeds from the sale of an investment property into another investment or property, delaying any capital gains taxes.

506(b)

Rule 506(b) provides an exemption under Regulation D of the Securities Act. This exemption provides a way for companies to raise money and sell investment opportunities to both accredited investors and a limited number of non-accredited investors per opportunity. Under this rule, the company offering the investment can’t advertise or publish investment details publicly.

A

Abatement

A reduction in amount or intensity. Usually applies to decreases in taxes or rent.

Absorption Rate

The Absorption Rate is the net difference in available unit square feet for lease between two dates, typically expressed as a percentage.

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    Accredited Investor: A person with an annual income exceeding $200,000 ($300,000 for joint income) for the last two years, expecting to earn the same or a higher income in the current year or a net worth of $1,000,000, excluding the primary residence.

    Sophisticated investor: An individual or entity with advanced knowledge, experience, and understanding of investment markets, enabling them to assess and make informed decisions regarding complex investment opportunities.