The value of the unencumbered interest in real estate as determined by subtracting the total of the unpaid mortgage balances plus the sum of any current liens against the property from the property’s fair market value. As it relates to real estate syndication, equity can be measured as the amount of capital a sponsor (property owner/developer) puts into a property. As a mortgage gets paid off the owner’s equity grows. When a property is sold, the equity is the difference between the purchase price and the sale price. The market drives the property’s equity but improving and upgrading the property can increase it.
« Back to Glossary Index