Step 2. By Learning Some Basic "Terms To Know" You're One Step Closer To Investing In Real Estate Crowdfunding With Confidence
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Real Estate (Crowdfunding) Basic Terms
REAL ESTATE INVESTMENTS VIA CROWDFUNDING
Real estate crowdfunding makes it possible for potential investors to invest in private real estate projects but you don’t have to be a landlord flip houses. Crowdfunding uses a large pool of investors and each provide small financial contributions.
Real estate crowdfunding is also called “Equity Crowdfunding”. It enables broad groups of investors to fund startup companies and small businesses in return for equity. Investors give money to a business and receive ownership of a small piece of that business.
A preferred return—simply called pref—describes the claim on profits given to preferred investors in a project. The preferred investors will be the first to receive returns up to a certain percentage.
The expected means the profit or loss anticipated by an investor on an investment that has known or expected return rates. This can be calculated by multiplying potential outcomes by the likelihood that they will occur and then adding up the results.
MINIMUM RAISE/TARGET RAISE
A minimum raise or target is the smallest amount an issuer will accept from the capital raise, security offering.
A share is a unit of ownership, or equity, in a company or a corporation. Shares are one of the most traded financial instruments. If you buy a share of a company, you are buying a piece of the company.
WHO CAN INVEST IN A REG CF PROJECT
Anyone can invest in a (Reg CF) Regulation Crowdfunding offering. However, you are limited in how much you can invest during any 12-month period in these transactions. The limitation on how much you can invest depends on your net worth and annual income.
ESTIMATED RETURN, ROI (RETURN ON INVESTMENT)
The expected ROI means the profit or loss anticipated by an investor on an investment that has known or expected return rates. ROI is a ratio that compares the gain or loss from an investment relative to its cost.