Syndication Structure: General and Limited Partners
A real estate syndication is a private investment vehicle in which multiple investors pool capital to acquire a property that any single investor could not purchase alone or would prefer not to manage independently. The syndication is typically structured as a Limited Liability Company (LLC) or Limited Partnership (LP) with two classes of participants: the General Partner (GP) and Limited Partners (LPs). The General Partner — also called the syndicator or sponsor — is the active manager. The GP sources the deal, negotiates the purchase, arranges financing, manages the business plan execution (renovations, leasing, operations), handles investor relations, and eventually executes the exit strategy (sale or refinance). The GP typically contributes minimal capital (0–10% of the equity) but bears unlimited operational responsibility and earns the promote (carried interest) for successful execution. The GP is often an LLC itself, and GP principals are personally liable for any personal guarantees they sign on the debt. Limited Partners are passive investors — they contribute the majority of equity capital, receive preferred returns and their share of distributions, and bear liability only up to their invested capital (they cannot lose more than they invested, and they have no personal liability for the property's mortgage). LPs are typically offered interests under a Regulation D exemption from SEC registration (most commonly Rule 506(b) — up to 35 non-accredited investors and unlimited accredited investors — or Rule 506(c) — only accredited investors but general solicitation is permitted). An accredited investor meets minimum wealth or income thresholds: net worth exceeding $1 million excluding primary residence, or income exceeding $200,000 ($300,000 joint) for the prior two years with expectation of the same.