If you’re new to real estate investing you may have heard the term distribution thrown around but are you confused about what it actually means? We’re here to help break it down.
In short: A distribution is like a dividend, but in real estate, it’s called a distribution.
So then why aren’t they called the same thing?
Well, in most cases they behave the same way but there can be some differences.
Distributions are payments from the equity of the company, while dividends are payments from the profit of the company. Dividends may or may not involve cash. In contrast, distributions always come in the form of cash payouts.
How are distributions calculated?
Distributions are payments from the equity of the property. They are calculated by subtracting recurring capital expenditures plus any mortgage payments and any other liabilities from the funds from operations.
How do you earn distributions with addy?
addy members receive distributions if there is profit left from paying those expenditures because they hold equity in the real estate.
When you invest in our real estate opportunities some of the properties may pay distributions. The expected schedule can range from monthly, quarterly or annually. The funds from distributions will show up in your addy wallet within your account. We send out notifications to investors when a distribution is scheduled.