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  • Writer's pictureTomond Jack

Who Are The Players In A Real Estate Syndication

If you aren’t familiar with real estate syndications, you have been missing out on a lucrative way to build wealth. A syndication provides an opportunity for you to passively invest in large scale real estate projects. These projects can include apartments, self-storage, mortgage notes, carwashes, and various other commercial real estate. There are 2 essential players in a syndication, the general partner (GP) and the limited partner (LP). Let’s take a deeper dive into who they are, each partner’s responsibilities, and compensation.

General Partner (GP)

The GP, often referred to as the operator or sponsor and the role we fill at SHH Equity Group, is the one creating and organizing the investment opportunity. Usually there is more than one general partner. The GPs work together and have the following responsibilities:

· Find the deal and perform due diligence

· Negotiate the purchase price

· Structure the financing and acquire the asset

· Formulate and execute the business plan

· Manage the day-to-day operations

· Makes any lending and sales decisions

The GPs have the fiduciary duty to execute their responsibilities for the project and must have the skillset to perform. Therefore, they bear unlimited liability for the business. The general partners work as a team with other industry professionals to successfully implement the business plan. These professionals include attorneys, insurance brokers, accountants, property managers, and real estate brokers. Although everyone on the team is not part of the general partnership, all are critical to the success of the project.

Limited Partner (LP)

As a passive investor, you are a limited partner in the business. Limited partners make up the majority of the investors in a real estate syndication. A real estate syndication typically has between 5 – 30 limited partners, sometimes more depending on the size of the deal. The LPs each contribute financially to the deal and have no managerial or day-to-day operational responsibilities in the partnership. Like the name implies, the limited partners have limited liability. The LPs’ liability is limited to their financial investment into the project. The main responsibility of the LPs is to vet the general partners to ensure they are comfortable with the GP team and investment opportunity. Limited partners benefit financially without being involved in the daily operations.


A syndication divides ownership of the business between the GPs and LPs with LPs usually receiving the lions share on the business. For example, a typical ownership split is 30% GPs and 70% LPs. The percentage split can vary depending on the deal. As for compensation, the general partner normally receives an acquisition fee for finding and structuring the deal in addition to a portion of the equity and monthly profits based on the ownership split. Limited partners are compensated from the equity and monthly profits based on the ownership split as well, which in our example is 70%. Each LP owns a pro rata share of the 70% based on the capital contributed to the deal. For example, if you contribute 10% of the money required and the LPs own 70% of the partnership, then you will receive 7% (70% x10%) of the overall equity and monthly profit.

Final Take

Real estate syndications require roles filled by qualified individuals who understand how these investments work. General partners lead the discovery and day-to-day operations while the limited partners provide the capital without taking on managerial tasks. Each role is compensated based on the contributions to the syndication. By partnering with experienced operators (GPs), as a passive investor you can fill the role of an LP and reap the benefits of large-scale real estate investments.

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