Roles of Limited and General Partners
In real estate syndications, you’ll find two types of partners: Limited and General. Let’s define what each is and the different roles they will play in a real estate syndication.
Limited Partners (LP’s): these are the investors, those brining equity to the deal. They are limited in both their control and liability. LP’s are only liable for the amount of money they invested into the deal, no more. They also have no control and need to have complete trust in the General Partnership team to execute the business plan and deliver on expected returns.
General Partners (GP’s): this is the team responsible for putting the deal together and seeing it through from acquisition to disposition. This is often a company (or companies) who have the experience and track record to manage this type of asset. The GP’s have a wide variety of responsibilities that include:
Source, underwrite, and make offers on opportunities
Oversee all due diligence, both financial and physical, and coordinate with professional property inspectors
Secure the best financing for the property
Work with attorneys to create the LLC and partnership agreements
Interview and hire property management company suitable for this type of asset
Raising Capital from investors for down payment, renovations, fees, etc.
Once acquired, responsible for overseeing the asset management, investor relations and ultimately executing on the business plan
In a real estate syndication, the day to day decision making is in the hands of the GP. They have all the control and should act in the best interest of their investors. As an LP, you’ll want to invest with an experienced team the specializes in the type of asset with a successful track record.