This is a short podcast episode from the Freedom Real Estate Group (hosts Flip and Danny) explaining the difference between limited partners (LPs) and general partners (GPs) in real estate syndications. LPs are passive investors who provide capital, hold ownership, and have liability limited to their investment; GPs actively manage deals (underwrite, perform due diligence, raise capital, manage assets) and accept management control with unlimited liability. The episode also mentions common industry acronyms (LP, GP, OM, MM), includes audience CTAs, and closes with a disclaimer.
Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another location. Whoa, look at that. Welcome to another episode of our podcast.
And our podcast is called Freedom through Passive Income.
That's right. Today's episode is actually called limited partner versus general partner. Now, this is your wheelhouse, 100%.
Yes.
So take it away.
Okay, well, first of all, for those of you who are listening and not watching, Flip did take the time to set up another podcast location.
We've only got like 4 million more podcasts to do.
And so we're in this room in what looks like. And we're probably going to get some coffee cups.
Oh, yeah. Dress up the table here.
Yeah. We still have some work to do, but for those who are watching video, you get to see a new scene that is actually right across from our offices. So it's going to be really easy to pop in here.
We're super far away.
Anyways, let's go into the content of.
This episode on location.
Thank you for this new location.
You're welcome.
All right, so limited partners versus general partners. So I think that this is an important thing to understand because we talk about this language all the time when we're talking about syndications and funds and things like that. So. So a limited partner is somebody who's going to invest capital in the deal, but they're not a part of major decisions, and they're just a passive part of the deal. They're gonna say, I've got 100,000 or 250,000 or a million, whatever it is. They're investing their money for a return and nothing else. They also have limited liability and talk about that after I explain what their general partner is.
That's because they're called limited partners. See, I'm quick.
You are quick. Yeah, there you go.
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All right, a general partner, they're the ones doing the work. They have full management, control and unlimited liability. I'll go into that in a second. So examples of general partners, people who found the deal People who underwrote the deal, who. People who helped do the due diligence on the deal, capital partners, people who helped raise the money to be a part of the deal and be able to close the deal. Project managers, asset managers. There's lots of different ways, but they're the ones doing all of the work. The limited partners get to come back, sit back, relax, cash their checks, get the passive income while they watch these other guys do all the work. And they don't even really watch. They get like something in their email box that says, hey, we did this. Oh, that's nice. Oh, look at the money. I just got. Ta da. So that's really the difference between limited partner and general partner in a very high level overview. There's really not a whole lot more that goes into it. But I do want to talk about the liability because this is an important piece because limited partners and general partners are both owners of the deal. So you do have ownership when you're a limited partner. Even if you're just giving money. It's not like private money lending where you're the lender, only you're the bank, and, and it's secured by a note and mortgage. In this case, you're contributing money to invest and become an owner. And part of that deal. In this case, as a limited partner, you do have limited liability and your limited liability is the amount that you invested. Right. So if you invested $100,000, that's the extent of your liability. If I'm a general partner, then I am unlimited. I have 100% liability for everything. So that's it. Flip.
Yeah. No, and I can't figure it out because when we got into the multifamily scene, there are so many. What are those called? Just initials. What is that? You know, there's a word for it.
Yes, acronym.
Yeah, that's what I was going for. And for the longest time, you know, they'd send me something and I'm like, ah, this email is coded. I have no idea what this email means. And so LPs and GPS. That's right. Because they don't call them limited partners and they don't call them general partners. They're LPs and GPs. Right. And you have to know this. And there's OMs and MMOs and M and M's and we should do an Ackern episode. Yeah, yeah. Because the SEC and the. Oh my gosh, just keep throwing them in there.
It's not the Southeastern Conference.
Very good.
Thank you very much.
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