What is an alternative investment?
Stocks, bonds, and the funds that hold them are the public markets: listed on an exchange, priced every second, sellable with a tap. An alternative investment is almost everything else—apartment buildings, oil wells, private companies, loans—owned through a private deal instead of a public exchange.
A private deal (you'll also hear 'offering') is a real project with a legal wrapper: investors put money into an entity, the entity buys and operates the asset, and each investor owns a slice. Because it's private, you can't sell that slice on a whim—that's the trade-off for return potential, steady income, and tax treatment the public markets rarely match.
Public markets
Investments listed on an exchange—stocks, bonds, ETFs. Priced constantly, sellable instantly.
Private deal / offering
A specific project raising money directly from investors. No exchange, no daily price, no instant exit.
Distribution
A cash payment from the deal to its investors—the private-deal version of a dividend.
Closing
The day the paperwork signs and your money actually goes into the deal. Every clock—hold period, first distribution—starts here.
How a deal comes together
Every deal starts with a sponsor—the company that finds the project, negotiates the purchase, signs for the loan, and runs the business plan. The sponsor raises part of the money from investors, borrows the rest, operates the asset for a stretch of years (the hold), and then exits—usually by selling or refinancing. Cash comes back to investors along the way as distributions, and at the exit.
You'll meet the formal names in module 04—the sponsor is the general partner (GP), investors are limited partners (LPs). For now the shape is what matters: the sponsor runs it, investors fund it, and the deal pays both according to written rules.
The capital stack—who stands in line ahead of you
Investor money is almost never the only money in a deal. Most deals also borrow—typically a senior loan from a bank, secured by the asset itself, exactly like a mortgage. That loan is 'senior' because it's paid first: its interest is paid before investors see income, and at a sale the bank is paid off before investors see a dime.
Stack every source of money by who gets paid first and you have the capital stack. Lower layers are safer and earn less; the top layer—the equity you'd own—is paid last, absorbs losses first, and owns most of the upside. The borrowing also adds leverage: the loan amplifies the equity's gains when the deal goes well, and its losses when it doesn't.
Senior debt
The bank loan, secured by the asset—the deal's mortgage. Paid first, lowest risk, lowest return.
Mezzanine debt
A second, junior loan behind the bank. Paid after senior debt but before any equity—a higher rate for higher risk.
Preferred equity
Equity with priority: paid a set return before common equity, usually in exchange for giving up the upside.
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.
Meet Cedar Court—the fictional deal we'll follow through the whole course. A sponsor buys a stabilized 240-unit apartment community for $30M, funded by a $19.5M senior bank loan plus $10.5M of investor equity—no preferred equity layer here, just the two. Your $100,000 is part of that equity: behind the bank in the stack, and owner of the upside. Here's how Cedar Court would actually look on the platform:
Hypothetical example
A teaching illustration, not a real offering.
Real estate
Founded 2012
$1.4B AUM
Denver-based multifamily operator. Since 2012, 6,000+ workforce-housing units acquired and repositioned across Colorado, Utah, and Idaho.
18 full-cycle exits, zero investor lossesCedar Court
OpenDenver, CO
A 240-unit garden-style apartment community in suburban Denver, 94% leased, acquired below replacement cost with a proven interior-renovation playbook.
Renovate units as leases roll, push rents to the submarket median, then sell the stabilized building.
1.8x
Equity multiple
7%
Annual cash yield
14%
Projected IRR
$50,000
Minimum
Alex Rivera
Director, Investor Relations
The capital stack
$30M
Purchase price
$19.5M
Senior debt
$10.5M
Investor equity
240
Units
The card shows what an investor earns; the capital stack shows how the deal is built. Your $100,000 sits in the $10.5M of investor equity—behind the $19.5M bank loan, and the owner of the upside.
Who can invest
Most private deals are open only to accredited investors—a U.S. securities-law status meant to mark investors who can bear the risk. Individuals generally qualify by income (roughly $200k a year, or $300k jointly with a spouse, sustained and expected to continue), by net worth ($1M or more excluding the primary residence), or by holding certain securities licenses.
Minimums are real too—commonly $25k to $100k or more per deal—and the money should be capital you will not need during the hold. Module 04 covers why.
What Altinvest is—and isn't
Altinvest curates private offerings from vetted sponsors and presents every deal in the same format, so offerings can be read and compared instead of decoded. The deals are the sponsors' own: Altinvest is not a broker-dealer or an investment adviser, doesn't hold your money, and doesn't tell anyone what to buy.
That's also the posture this course teaches. Every module describes how things work and what to ask—never what to do. The judgment calls belong to the investor and their own advisors.
An alternative investment is a private deal: a real project you own a slice of, with no exchange and no instant exit.
The bank is paid first, then the equity—but within that equity, the pref usually pays investors before the sponsor's own profit share.
Private deals are for accredited investors, with money they won't need during the hold.
Lost on a term? The glossary has every definition in one place.
Educational content only—not investment, legal, or tax advice. Every figure used in examples is hypothetical, including Cedar Court, which is a fictional deal.