K-1 is an annual tax form used by partners in an LLC to provide investors the detailed information on their share of a partnership’s taxable income. It includes each partner’s income, gains, losses, deductions and credits. 

Any individual or business entity who has at least one of the following:

• earned income that individually exceeded $200,000 (or $300,000 together with a spouse) over the last two years, and with expectation of the same or higher for the current year.
• has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
• A general partner, executive officer, or director for a company issuing unregistered securities, or restricted stock.

• A private business development company or an organization with total assets exceeding $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated investor who demonstrates sufficient education, job knowledge and experience in unregistered securities.
• Any entity in which all of the equity owners are accredited investors.

A person who demonstrates sufficient education, job knowledge and experience in investing experience.

The rate of return based on the income that the property is expected to generate. The cap rate is calculated by dividing the property’s net operating income (NOI) by the current market value or purchase price of a property (NOI / Current market value = Cap Rate)

For example, a 300-unit property with an NOI of $2,300,000 that was purchased for $23,300,000 has a cap rate of 9.8%.

Total revenue from the property minus operating expenses, excluding capital expenditures and debt service.

For example, a 300-unit property with a total income revenue of $2,333,000 and total operating expenses of $1,333,100 has a NOI of $999,900.

Total costs of maintaining and running a business

Some Examples of Total Operating Expenses are the following: Taxes, Insurance, Repairs & Maintenance, Administration and Management, Utilities, Marketing, Payroll, Contract Services, and Property Management.