Whether it’s human capital or venture capital, accredited investors leverage their experience, financial assets, or anything that confers value every day. As defined by SEC Rule 501 of Regulation D, an accredited investor is an individual with an annual income of at least $200,000 (or $300,000 for joint income), or a net worth of at least $1 million (for both individual and joint net worth) at the time of purchase, excluding the value of their primary residence.
Other categories of capital include financial, physical, intellectual, and natural capital. In multifamily real estate investing, capital is essential for funding operations, growing wealth, and generating income. While money can be considered a form of capital, it’s the broader term encompassing all assets that contribute to an individual or entity’s financial health.
This article will briefly cover and define key terms associated with capital, including capital events, gains, reserves, metrics, and other related concepts.
CALLING CAPITAL
Calling capital refers to when a sponsor or general partner (GP) requests additional funds from its limited partners (LPs) to cover unexpected costs or avoid a distressed sale. More commonly, capital calls refer to a standard course of business where investors commit and wait until their capital is needed by the sponsor to fund a property acquisition, renovation, or other project. Every deal is different, and these definitions are generally outlined in the firm’s offering documents.
CAPITAL EVENTS
Capital events can refer to several things, including refinances, recapitalizations, and sales. These are typically identified or defined in the firm’s offering documents.
CAPITAL EXPENDITURES
Capital expenditures are expenses real estate investors incur to maintain or improve a property’s condition and value. CapEx investments typically include significant, one-time expenses such as major renovations, repairs, or upgrades to a property’s physical structure or systems. For example, installing a new roof, replacing outdated plumbing or electrical systems, or upgrading the landscaping are all capital expenditures (CapEx) investments. [1]
CAPITAL GAINS
A capital gain refers to the increase in the value of a capital asset that is realized when it is sold. In other words, a capital gain occurs when you sell an asset for more than what you paid to purchase it.
CAPITAL PRESERVATION
Capital preservation is a strategy for protecting the initial value of an investment, minimizing risk, and ensuring the principal investment remains intact.
CAPITAL RESERVES
Capital reserves are funds set aside for future capital expenditures or long-term real estate investments. They are usually collected or accounted for annually on a per-unit or per-square-foot basis. Capital reserves are crucial to a property’s financial health, allowing owners to proactively address maintenance, repairs, and upgrades without using their regular operating budget or taking out loans.
CAPITAL STACK
The capital stack is a hierarchical representation of the financial structure of a commercial real estate deal. A capital stack visualizes the various types of capital used to finance a real estate project, typically ordered by their priority of repayment in the event of a sale, refinancing, or liquidation. [2]
CAPITALIZATION (CAP) RATE
The cap rate is a metric used in real estate valuation. It is calculated by dividing the property’s net operating income before debt service by its market value and expressed as a percentage. It shows the expected annual return on investment if you purchase the property on an all-cash basis with no leverage.
WORK WITH BAM CAPITAL FOR MULTIFAMILY REAL ESTATE INVESTING
BAM Capital partners with accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying the most profitable assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units.
Remember that no investment is risk-free. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.
Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect Bam Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Bam Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.
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SOURCES:
[1] BAM Capital. (2023). “5 Questions investors might consider in multifamily syndication.” https://bamcapital.com/questions-ask-before-investing-multifamily-syndication/
[2] BAM Capital. (2025). “Real estate capital stack explained.” https://capital.thebamcompanies.com/real-estate-capital-stack-explained/
