Legal max number of general partners

[Joshua Schoer]

Hi All,

I went to a meetup last night on multifamily here in Jacksonville and it was great.

One of the questions that came up was the not having too many partners in a deal without syndication, it becomes frowned upon legally at some point.

The problem is that under a certain number of units the scale isn't there to absorb the cost of going through a syndication, so I've been trying to put together a small group of investors interested in partnering on a multifamily deal, but don't want to get in trouble.

As a caveat, I won't hold anyone to it as binding legal advice, but in general is there a rule of thumb about the maximum number of partners in a deal that is legal?

Thanks in advance!

Josh

[Evan Polaski]

@Joshua Schoer, a syndication only comes into play if you are looking at passive investors, who beyond putting money in, have no real say in the deal. I am guessing, given the meetup, that you are looking at a JV and partners for the JV, where all partners will have a certain amount of responsibility and say in the deals.

I am not aware of any limit to the number of partners you can bring in, but as noted, all have to have responsibilities within the partnership to not be viewed as passive and the more you have the more you split up the money, and it might not make sense.  

On the syndication side, I have heard of deals that end up with 8 GPs, although again I don't know of any reason you couldn't have more than that, but it becomes a point of what is another GP bringing to the deal of value.