What roles do a LP and GP play in a real estate syndication?
In a real estate syndication, the limited partners (LPs) and the general partner (GP) are the two main types of investors. The LPs are passive investors who provide capital to the investment and are entitled to a share of the profits, but they are not actively involved in the management of the property. The GP, on the other hand, is responsible for managing the property and making decisions on behalf of the investment. The GP may also be an investor in the syndication and may receive a share of the profits, in addition to any management fees or other compensation for their services.
The roles of the LPs and GP in a real estate syndication are defined in the syndication agreement, which is a legally binding document that outlines the terms of the investment. The syndication agreement typically specifies the rights and obligations of each party, including the amount of capital that the LPs will contribute, the management responsibilities of the GP, and the distribution of profits.
It is important for both LPs and GPs to carefully review the syndication agreement and understand their rights and obligations before committing to the investment. The LPs should also be aware of the risks associated with real estate syndications, as they may be subject to losses if the investment does not perform as expected. On the other hand, the GP has a fiduciary responsibility to act in the best interests of the investment and to manage the property in a competent and ethical manner.