Why investing with a General Partner

Real estate is a complicated and nuanced business that takes years of experience and painful lessons learned before one begins to perform well.

Can you make millions in real estate without expertise? Perhaps, but you can lose it too. Unfortunately, there have been enough real estate entrepreneurs who bootstrapped their way to success to make the dream appear almost within reach, but the reality for most first-time investors is harsh.

There is a common misconception that the way to get rich in Real Estate is by bootstrapping alone your way to it, as sold by many get-rich-quick courses.

DIY entrepreneurs are taking enormous risk in a competitive business where they have minimal expertise. This is a recipe for disaster, and it has fostered an environment where many people try to go at it alone and end up losing money and many nights of sleep for avoidable reasons.

The General Partner

You don't need to directly buy your own property to be an owner and reap the benefits of an investment allocation to real estate. Many Accredited Investors create a real estate portfolio by investing with private operators, enters the General Partner.

The General Partner of a real estate private equity fund raise capital from investors in advance based on the track record of the GP and a pre-defined strategy. They then begin to acquire properties, optimize and manage them. Properties are often purchased through a Limited Liability Partnership to protect the larger fund investment from liability caused by a single problem property. Another key benefit of this structure is the ability to distribute tax-efficient cash returns to investors. It is also common for GP to invest their own money in acquiring the properties, as to have "skin-in-the-game".

Remember to do your homework and read the Investor Package. At the minimum, the package should introduce who the GP are and their credentials; their high-level strategy and track record; and a list of different risks and how the GP plans to mitigate them. There is real money finding a great GP to get behind. Especially one who is doing a lot of deal volume and you can invest alongside for many years.