Responsibilities of a Limited Partner in a syndication

[David Fernandez]

We usually invest our idle money as a private lender. We get the negotiated interest rate on the money we lend. We don’t participate on the upside, but we don’t have to do anything else after we lend the money.  

I’ve been looking at syndications and I’m wondering what are the cons of this type of investment. I understand the preferred return, splits, and other related return/income points; however, I’m wondering if there is anything else to do while being a limited partner or what a limited partner may be liable for. Are we on the hook for anything if the project doesn’t succeed? Are we liable for anything that happen in the property?  

In short, what are the differences between a private lender and a limited partner?