A Limited Partner (LP) refers to an investor who contributes capital to a real estate investment partnership, typically a Limited Partnership or a Real Estate Investment Fund. Unlike a General Partner (GP), who is responsible for the daily operations, management, and decision-making, the LP has limited liability and involvement in the day-to-day operations of the investment.
The Limited Partner’s liability is generally restricted to the amount of capital they have invested in the partnership. They receive a share of the profits, based on the agreed-upon terms in the partnership agreement, but are typically not involved in management decisions, property selection, or the handling of daily business activities.
This structure allows LPs to invest in real estate without having to be involved in the complexities of property management, while the GP typically takes on that role. Limited Partnerships are common in real estate investment and provide an avenue for investors to participate in larger real estate projects, sharing both the risks and rewards while limiting their personal liability.