Accredited Investor: Any natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his purchase exceeds $1,000,000. Or any natural person who had individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.
Beneficiary: A person or entity named in a will or a financial contract as the inheritor of property when the property owner dies. A beneficiary can be a spouse, child, charity or any entity or person to whom the property owner would like to leave his or her possessions and assets.
Contract: A legal agreement between entities that requires each to conduct (or refrain from conducting) certain activities. This document provides each party with a right that is enforceable under our judicial system.
Due Diligence: The process of gathering information about the condition and legal status of assets to be sold.
Foreclosure: The legal process by which an owner's right to a property is terminated, usually due to default. Typically involves a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt.
Income: For corporations, revenues minus cost of sales, operating expenses, and taxes, over a given period of time. Income is the reason corporations exist, and are often the single most important determinant of a stock's price. Income is important to investors because they give an indication of the company's expected futuredividends and its potential for growth and capital appreciation. That does not necessarily mean that low or negative earnings always indicate a bad stock; for example, many young companies report negative income as they attempt to grow quickly enough to capture a new market, at which point they'll be even more profitable than they otherwise might have been. also called earnings.
Loss: A reduction in the value of an investment.
A condition in which a company's expenses exceed its revenues. Opposite of profit.
Maturity: The date on which a debt becomes due for payment. Also called maturity date.
Net Income: In business, what remains after subtracting all the costs (namely, business, depreciation, interest, and taxes) from a company’s revenues. Net income is sometimes called the bottom line. Also called earnings or net profit.
For an individual, gross income minus taxes, allowances, and deductions. An individual's net income is used to determine how much income tax is owed.
Non-Accredited Investors: Persons or entities who do not satisfy one or more of the alternative definitions of the term "Accredited Investor" and who, by virtue of their financial resources acumen, satisfy a joint venture manager or its authorized representatives that such investors satisfy the suitability standards imposed by Rule 506 of Regulation D and otherwise meet the finanacial investment standards so required by each joint venture manager.
Passive Income: Income that does not require active participation.
Per Annum: The amount of return on investment each year.
Power of Attorney: A written instrument duly signed and executed by an individual which authorizes an agent to act on his behalf to the extent indicated in the document.
Private Placement Offerings (PPO): The sale of securities directly to institutional investors, such as banks, mutual funds, insurance companies, pension funds, and foundations. Does not require SEC registration, provided the securities are bought for investment purposes rather than resale, as specified in the investment letter.
Profit: The positive gain from an investment or business operation after subtracting for all expenses. Opposite of loss.
Rate of Return: The annual rate of return on an investment, expressed as a percentage of the total amount invested. Also called return.
Return on Investment (ROI): The income that an investment provides in a year.
SEC: The Securities and Exchange Commission.
Subscription Agreement: An application by an investor to join a limited partnership. In most cases, the investor will have to fill out a form created by the general partner evaluating the investor's suitability for the investment in the partnership. Note:
All limited partners must be approved by the general partner. Becoming a limited partner rather than a partner is an attractive option since it means the investor's liability is limited to the amount he or she has invested in the partnership.
Tax Lien: Claim made by a federal or local government agency against a taxpayer's property for delinquent or overdue taxes. The tax lien is effected through tax assessment, demand, and failure to pay. In some cases, a lien may be applied to property held by a third party. One the taxes are paid, the lien is released.
Terms: The period of time that an agreement is in effect.
