GP and LP Responsibilities In a Real Estate Deal

Now that you have completed your exploring of the real estate and have decided that multifamily syndication is the best investment option for you, you are reasonably trying to learn more about it, as you don’t want to look completely clueless when meeting with future partners. And that is the correct thing to do. That’s why I decided to help you learn more about the duties of two main characters involved in apartment syndications.

Let’s start by mentioning that apartment syndication is a partnership between five parts, including general partner, limited partner, commercial real estate broker, a real estate and securities attorney, and a property management company. But as I already mentioned above, in this blog post we will be focusing on two - general and limited partners.

Who is The General Partner and what are their duties?

Plainly explained - the general partner or simply GP is an owner of the partnership, who is responsible for collecting money from different investors and managing the properties from top to bottom. Obviously, there is so much that should be done with multifamily properties, that’s why general partnership, in most cases, includes multiple people who are all responsible for different aspects of the property management such as:

1. Selecting an investment market;

2. Guiding the passive investors;

3. Distributing profits equally to investors;

4. Finding clients;

5. Working with clients of the property or simply tenants;

6. Working with banks;

7. Being involved in the management daily;

And basically, everything that needs to be done for the investment and the property to succeed and to generate the best possible returns for property’s limited partners.

Who are The Limited Partners and what are their duties?

Limited partner or LP is a term used in apartment syndications for passive investors, which itself makes everything clear as we all know how passive investing works - investors put their capital into the property while having no direct responsibility of managing them, which means they are free from all the responsibilities of GP that I have listed above.

The main and basically only duties of limited partners are providing as much capital contributions as it was initially stated in the agreement and eventually gaining equally shared profits from the property.

This is exactly what passive investors are looking for, stressless way of generating a great income and being involved in real estate without any actual work done from their side.