LP vs GP in Commercial Real Estate Investing | Insight
Commercial real estate investing often utilizes a GP-LP structure. The general partner (GP) actively manages the investment, including sourcing, financing, and overseeing operations. Limited partners (LPs) provide capital and earn passive income, with limited liability and decision-making involvement.
The GP takes on greater risk due to personal guarantees and direct involvement, but may receive higher potential returns through fees and performance-based bonuses. LPs enjoy reduced liability and less work but have less control over the investment outcome. Choosing between GP and LP depends on your individual goals, risk tolerance, and real estate experience.