ARTICLE

Why We Know Limited Partnerships are Better

September 12, 2020
By admin

Limited Partnerships offer many of the benefits associated with individual home ownership; without all the headaches!

Why use Limited Partnerships for real estate investments? 

Without the burden of management responsibility, liability for debt, or a large cash investment, Limited Partnerships offer many of the benefits associated with individual property ownership; without all the headaches!

Here are some of the key benefits for Limited Partners:

ECONOMY OF SCALE. Smaller investments, but still providing the same return as big investments.

 Large investments are not always required, so a Limited Partner may invest a modest amount (subject to minimum investment requirements). Limited Partners are issued Limited Partnership Units, to provide proportionate ownership in the Real Estate / Development, similar to the way shares in a company are issued.

LIMITED LIABILITY FOR LIMITED PARTNERS. The General Partner is the team / individual leading the investment and management that carries liability associated with the project. This is one of the most important legal features of a Limited Partnership; Limited Partners are not liable for obligations or debts of the Limited Partnership.

NO ADVERSE EFFECTS ON CREDIT RATINGS. The General Partner arranges project financing and often is required to provide a personal guarantee. Limited Partners are not responsible for project covenants and guarantees.

EASY FOR INDIVIDUALS TO PARTICIPATE. A Limited Partnership structure is a fundamental building block for providing investment opportunities to individuals, facilitating easy and user-friendly access to real estate and development.

PRIVATE EQUITY, A GREAT COMPONENT OF A SUCCESSFUL INVESTMENT PORTFOLIO. Stocks and mutual funds have liquidity which comes at a cost; the value of those investments is determined by, among other things, mass psychology in the public markets. Limited Partnerships are private equity and the value of those investments is determined by the value of the underlying asset(s). Often there is very low correlation between the value of private equity investments and public market investments. An investment in private equity can be viewed as a prudent and valuable component of an investment portfolio.

If Limited Partnership investing sounds like the right fit for your financial goals, register below to connect with us.