Alignment of Interests
How Do We Align Interests in Our Real Estate Syndications?
In a real estate syndication, the general partner (GP) and the limited partners (LPs) each have different roles. The GP typically invests a small minority of the equity but takes on a more active role in acquiring and financing the property and making day-to-day management decisions, while the LP’s invests the vast bulk of the…
What is a Waterfall in a Real Estate Syndication and Why is it Important?
In a typical real estate syndication, a waterfall structure allocates the profits or losses from the investment to the limited partners (LPs) and the general partner (GP). This is done according to a predetermined formula, or “waterfall,” and this formula is documented in detail in the partnership’s Operating Agreement. The most obvious goal of a…