Every term, in plain English
Each entry links back to the module that teaches it. If a term you hit anywhere on the platform isn't here, that's a gap—tell us and we'll add it.
1031 eligible
Lets a real-estate seller roll a sale's gain into this deal and defer the capital-gains tax, potentially indefinitely.
Accredited investor
The securities-law status most private deals require—qualified by income (roughly $200k a year, or $300k jointly), net worth ($1M+ excluding the primary residence), or certain licenses.
Alternative investment
Any investment owned outside the public markets—real assets, private companies, private loans—bought through a private offering.
Asset Depreciation
Spreads the same depreciation write-off evenly over the hold instead of front-loading it—available on nearly every real-asset deal.
Bonus Depreciation
Front-loads most of a real asset's depreciation write-off into year one—shelters passive income the deal produces early.
Capital gain
The profit made selling an investment for more than it cost—and the tax event that comes with it.
Capital stack
A deal's sources of money, ordered by who gets paid first: senior debt, then any middle layers, then equity.
Cash-on-cash
Annual pre-tax cash distributions divided by the cash you put in. A 7% cash-on-cash on $100k means about $7,000 a year while you hold.
Closing
The day the paperwork signs and your money actually goes into the deal. Every clock—hold period, first distribution—starts here.
Commodities
Owning resource production—oil and gas, mining, metals. You own the barrels and the ounces, not a trade on their price.
Common equity
The bottom of the stack and the top of the upside—what investors and the sponsor own in a typical deal. Paid last as a class, behind any debt or preferred equity. Within it, module 04's preferred return usually pays investors before the sponsor's own profit share—'last' is about the stack, not about investors versus the sponsor.
Current yield
The income the deal is paying right now, as a percent of your investment—often shown on a deal card as cash yield. Close cousin of cash-on-cash; watch whether it's actual or projected.
Depletion allowance
Oil & gas only—shelters a slice of production income every year as the resource draws down, the mineral world's version of depreciation.
Depreciation
The tax code's allowance for wear and tear—a paper loss that can shelter the deal's income.
Depreciation recapture
At sale, the IRS takes back tax on depreciation already deducted—why 'tax-free' is often really 'tax-deferred'.
Development
The asset doesn't exist yet. No income for a while, the most that can go wrong, and the biggest multiple if it all goes right.
Distribution
A cash payment from the deal to its investors—the private-deal version of a dividend.
Distribution cadence
How often checks go out—monthly, quarterly, annually. Same yield, very different feel.
Due diligence
The homework before investing: verifying the sponsor, the numbers, and the assumptions behind them.
Equity
Ownership. In a deal, the capital that's last in the stack (behind any debt) and owns the upside—though a pref can still pay investors before the sponsor within that equity.
Equity multiple
Total cash returned divided by cash invested, over the whole deal. 2.0x on $100k means $200k back—your capital plus $100k of profit. It ignores time completely.
Exit strategy
How the gain actually gets realized—a sale, a refinance (a new loan that returns cash to investors), occasionally an IPO. Until the exit happens, the growth is on paper.
First distribution
How long after closing the first check arrives. A development deal might not distribute for years; a stabilized one might start next quarter.
GP catch-up
A waterfall tier where the sponsor takes an outsized share after the pref until total profits reach the target ratio.
Healthcare
Deals where the healthcare economics are the thesis—clinics, devices, facilities. Demographics do a lot of the work.
Hold period
How long your capital is committed. The bridge between the multiple and the IRR: the same multiple over a shorter hold is a higher IRR.
Hurdle
The return investors must receive before the GP's promote turns on—usually the preferred return.
IDC deductibility
Oil & gas only—the labor, services, and supplies with no salvage value, typically most of a well's cost, deductible in year one.
Illiquid
Not sellable on demand. Private-deal capital is committed for the hold unless the deal offers redemption.
Infrastructure
Operating or development-stage real assets—power, data centers, transport. Long-lived contracts, long-lived cash flows.
Leverage
Borrowed money inside the deal. Amplifies the equity's returns in both directions—gains and losses.
Limited partner (LP)
An investor in the deal: puts in capital, takes no operating role, and risks only what they invested.
Management fee
Annual fee for running the deal, usually a percent of invested equity or assets. Compensation for work—not a return on the GP's capital.
Mezzanine debt
A second, junior loan behind the bank. Paid after senior debt but before any equity—a higher rate for higher risk.
Opportunity zone
Lets an investor park a recent capital gain here—the original gain is deferred, and after a ten-year hold this investment's own appreciation can be tax-free.
Pass-through
A business whose profits flow to the owners' personal tax returns instead of being taxed inside the company.
Passive income / loss
Income or paper loss from investments you don't actively operate. Passive losses generally offset only passive income, not a salary.
Preferred equity
Equity with priority: paid a set return before common equity, usually in exchange for giving up the upside.
Preferred return
The annual return investors must receive before the sponsor (the company running the deal) takes a share of profits. A hurdle and a priority—not a guarantee that money will be there.
Principal
The money you originally invest—your capital.
Private credit
The loans. You are the lender, and the return is the interest—income first, upside capped by design.
Private deal / offering
A specific project raising money directly from investors. No exchange, no daily price, no instant exit.
Private equity
Control of mature, cash-flowing companies—buyouts and roll-ups. The return is built by operating the business better, then selling it.
Pro forma
The sponsor's forward financial model of the deal—every projected number comes from it.
Profit split
How profits divide between LPs and GP after the hurdle—'70/30' means investors take 70%. The GP's share is the promote: pay for performance.
Projected IRR
The annualized rate of return, accounting for exactly when each dollar goes out and comes back. Time-sensitive by design—early money back pushes IRR up.
Promote
The GP's share of profits above the hurdle—pay for performance, not a fee.
Public markets
Investments listed on an exchange—stocks, bonds, ETFs. Priced constantly, sellable instantly.
Public markets (asset class)
Liquid, listed-securities strategies—hedge funds, equity income. The alternative part is the strategy, not the asset.
QBI / 199A deduction
A deduction on qualified pass-through business income (profits that flow to your personal return instead of being taxed inside a company)—lowers the tax on the income the deal reports every year.
Real estate
Property. Returns come from rent collected while you hold and appreciation when the asset sells or refinances.
Redemption
A deal's stated early-exit window, if any. If an offering doesn't mention one, read it as illiquid until exit.
Return of capital
Getting your original investment back—the waterfall's first tier, and sometimes part of early distributions.
Schedule K-1
The tax form a partnership sends each investor, reporting their share of the income, losses, and deductions.
Senior debt
The bank loan, secured by the asset—the deal's mortgage. Paid first, lowest risk, lowest return.
Sponsor / General partner (GP)
The company that finds, finances, and operates the deal—and earns a promote for performance.
Stabilized
The asset already works—leased, producing, cash-flowing. Lower risk, income from day one, less room for a big markup.
Value-Add
The asset works but could work harder—renovate, re-lease, re-price. Some income now, a markup if the plan lands.
Venture
A minority stake in early, pre-profit companies. A growth bet: most positions return little, the winners return the fund.
Waterfall
The deal's written payout order: return of capital, then the pref, then any catch-up, then the split.
Educational content only—not investment, legal, or tax advice.