Deal terms and returns
GP vs LP in a Real Estate Syndication: Who Does What
The short answer
GP vs LP means general partner vs limited partner, a real estate syndication's two roles. The general partner, usually the sponsor, finds, finances, runs and sells the property, and its principals sign any loan guaranty. Limited partners supply most of the equity, stay out of daily decisions and generally cannot lose more than they invested or agreed to contribute.
- The GP runs the deal. It finds the property, arranges the loan, carries out the business plan and decides when to sell.
- LPs supply most of the money. In one Crowd Street education example, the capital partner puts in 90% of the equity and the sponsor 10%.
- LP liability is limited. Under Delaware law, an LLC's debts belong to the company, not to its members or managers.
- The promote tilts the profit split. In Relli's illustration, a GP with 10% of the capital keeps 19% of the profit.
In this guide · 12 sections
- What is the difference between a general partner (GP) and a limited partner (LP)?
- How does the GP/LP structure work in a syndication?
- Why do real estate syndications use a GP/LP structure?
- Is a real estate syndication an LP or an LLC?
- What does the general partner do?
- Who signs the loan in a real estate syndication?
- What rights does a limited partner have?
- How do the GP and LPs split profits?
- Does the GP have to invest its own money?
- What is a co-GP in real estate?
- How is a GP/LP syndication different from a joint venture?
- Can an LP be active in the deal, and are LPs taxed as passive investors?
Two roles
What is the difference between a general partner (GP) and a limited partner (LP)?
The GP (general partner) is the sponsor that runs a real estate syndication, and the LPs (limited partners) are its investors. LPs supply most of the money and stay out of daily decisions. GP and LP are partnership words. The same two roles exist when the deal is a limited liability company (LLC): the sponsor is the manager, and investors are members.
Relli co-founder and CEO Mor Milo sums up the difference in one line:
"A limited partner is someone that has limited responsibility and a general partner is someone that is generally responsible for the offering."
Mor Milo, Relli co-founder and CEO, in LP vs GP (August 4, 2026)
| Question | General partner (GP) | Limited partner (LP) |
|---|---|---|
| Who it is | The sponsor's company | Outside investors |
| Share of the money | A smaller slice of the equity | Most of the equity |
| Daily decisions | Makes them | Votes only on major matters |
| The loan | Principals sign any guaranty | Not usually on the loan |
| Worst case | Can owe more through guaranties | Generally loses what it put in |
| How it earns | Fees, its own share, a promote | Its share of cash flow and sale |
How it is built
How does the GP/LP structure work in a syndication?
A GP/LP structure puts one property, or a few, inside a new company that the GP controls and the LPs mostly own. The money moves in a set order.
- The sponsor forms a deal entity, often a Delaware LLC or limited partnership, and makes its own company the GP or managing member.
- Investors sign the subscription documents and wire their money to that entity, which makes them LPs or members.
- The entity buys the property with the investors' equity plus a loan.
- The GP carries out the business plan and sends distributions, reports and K-1 tax forms.
- When the property sells or is refinanced, cash goes back to the partners in the order the operating agreement sets, called the waterfall.
Why do real estate syndications use a GP/LP structure?
Syndications use a GP/LP structure because it gives each side what it needs. The sponsor gets one clear chain of command, so it can sign a lease or refinance a loan without polling every investor.
Investors get limited liability. Delaware's limited partnership act says a limited partner "is not liable for the obligations of a limited partnership unless he or she is also a general partner." The other exception is taking part in control of the business.
The tax treatment fits too. A deal entity taxed as a partnership passes income and losses through to each partner on a K-1. For an LP, that rental income is passive by default under the IRS passive activity rules.
Is a real estate syndication an LP or an LLC?
Most real estate syndications are LLCs taxed as partnerships, and some still use limited partnerships. The labels change (manager and members instead of GP and LPs), but the split of control and money is the same. Delaware's LLC act says the company's debts are "solely the debts, obligations and liabilities of the limited liability company." No member or manager is personally liable just because of that role.
The GP's job
What does the general partner do?
The general partner handles everything from the first look at a property to the final distribution. Crowd Street (formerly CrowdStreet) lists the core of it on an education page about co-investment structures. The GP sources the asset, secures the financing, executes the business plan, manages the property and sells it. Day to day, the GP also:
- Raises the equity from LPs and puts in some of its own.
- Hires the property manager, sometimes a company the sponsor owns.
- Sends investor reports and K-1s.
- Decides when to refinance, call more capital or sell.
Who signs the loan in a real estate syndication?
The deal entity is the borrower, and the GP's principals sign the loan for it. The principals also sign any personal guaranty the lender asks for, either full recourse or a narrower "non-recourse carve-out" guaranty. Limited partners are not normally asked to sign. Some sponsors charge the deal for that risk: one SEC-filed offering lists a guaranty fee of 0.5% of the loan.
An LP's exposure is generally the money it invested plus any further capital it agreed to contribute. Funding a capital call is "generally not mandatory," according to Crowd Street's capital call FAQ. Even so, the operating agreement can dilute or penalize a member who does not fund. In 2026 a New York appeals court applying Delaware law upheld a forced buyout of a defaulting member.
LP rights
What rights does a limited partner have?
A limited partner's rights come almost entirely from the deal's operating agreement or limited partnership agreement, so they differ from deal to deal. The private real estate glossary defines the operating agreement and the subscription agreement you sign to invest. Four rights are worth finding before you sign:
Voting
Usually only on major matters. Delaware's act lists matters an LP can vote on without becoming liable as a GP. Examples are a sale of assets, new debt, dissolution or amendments.
Selling your stake
Only as the agreement allows. Under Delaware's LLC act, a buyer of an interest gets the economics. The buyer becomes a member only if the agreement or the other members allow it. See selling a private investment early.
Removing the GP
ILPA, the institutional LP trade group, says LPs should be able to remove a GP "for bad acts" and, with a supermajority, without cause. Single-asset syndications often give LPs fewer of these rights, so read the removal section.
The GP's duties
A Delaware LLC agreement may restrict or even eliminate fiduciary duties, but not the implied covenant of good faith and fair dealing. The duties and exculpation sections show which standard applies.
Removal for cause can mean "forfeiture of promote or membership interest," according to a 2025 law-firm review of real estate joint venture terms. If a GP stops reporting, start with the agreement's information and removal rights. The risks guide covers what LPs can do if the GP goes quiet.
Splitting profits
How do the GP and LPs split profits?
The GP and LPs split profits by the waterfall in the operating agreement, which usually pays LPs their capital and a preferred return first. The GP then takes a bigger share of what is left, called the promote. That is how a GP with a small share of the money can earn a much larger share of the profit.
Worked example
A sponsor raises $5,000,000 of equity: $4,500,000 from LPs (90%) and $500,000 of its own (10%), invested on the same terms as the LPs. Over a five-year hold the property returns $8,000,000 to the equity after the loan and fees, a $3,000,000 profit. The terms: an 8% preferred return (simple, cumulative), then 70% of the rest to all capital and 30% to the GP as its promote.
| Step | Total | LPs | GP's own money | GP promote |
|---|---|---|---|---|
| 1. Capital back | $5,000,000 | $4,500,000 | $500,000 | $0 |
| 2. 8% pref for 5 years | $2,000,000 | $1,800,000 | $200,000 | $0 |
| 3. 70% of the rest | $700,000 | $630,000 | $70,000 | $0 |
| 4. 30% promote | $300,000 | $0 | $0 | $300,000 |
| Profit | $3,000,000 | $2,430,000 | $270,000 | $300,000 |
The GP put in 10% of the equity and kept 19% of the profit: $570,000 on $500,000, a 2.14x multiple. LPs kept 81%: $2,430,000 on $4,500,000, a 1.54x multiple.
Real deals add more tiers, catch-ups and timing rules. The preferred return guide shows how the waterfall splits profits step by step. The sponsor fees and promote guide covers what the GP earns before any profit is split.
Does the GP have to invest its own money?
GP investment in real estate syndications has no standard size, because no law or reliable survey sets one. So ask for the exact dollar amount instead of a percentage.
Then ask two follow-ups. Is it cash, or fees the GP is rolling back into the deal? Does it sit alongside the LPs' money or behind it? The vetting guide explains how much the GP should invest compared with the fees it earns.
Co-GPs and JVs
What is a co-GP in real estate?
A co-GP is a second company that shares the general partner role in one deal. A co-GP often brings part of the equity, investor relationships or local operating experience. The deal documents set each co-GP's job and its share of the fees and promote.
The SEC's bad actor rule covers general partners and managing members. A co-GP with a disqualifying event can cost the whole offering its Rule 506 exemption. Check each co-GP the way you would check the lead sponsor. The sponsor-side guide explains how sponsors structure the GP side.
How is a GP/LP syndication different from a joint venture?
A real estate joint venture uses the same two roles, but usually with a few large partners instead of many small ones. Crowd Street's education page describes the common version. An outside capital partner puts up "typically 90%" of the equity, and the sponsor puts up the other 10%. In a syndication, dozens of LPs sign the same documents, and none of them negotiates its own terms.
On Relli, most offerings are Rule 506(c) offerings and some are joint ventures. Each offering page shows the sponsor and its offering materials, and you can talk to the sponsor's team directly before you decide.
Common questions
Can an LP be active in the deal, and are LPs taxed as passive investors?
Can a limited partner be active in the deal?
Only within limits. Under Delaware's act, an LP that takes part in control can become liable to anyone who reasonably believed it was a general partner. Consulting with the GP and voting on major matters are listed as safe.
Are LPs taxed as passive investors?
Generally, yes. Rental activity is passive by default, and limited partners are generally barred from the material participation tests. The K-1 guide covers how passive losses work.
How do GP interests work in oil and gas deals?
A working interest held without limited liability is not a passive activity under the tax code, so drilling losses can offset other income. The trade-off is personal liability. The oil and gas joint venture guide explains it.
Is GP vs LP different in a private equity fund?
The roles are the same: the fund manager is the GP and the investors are LPs. Funds own many assets instead of one, which changes how fees and the promote are calculated, as the fund vs syndication guide shows.
Watch
Sources
- 6 Del. C. § 17-303, Liability of limited partners to third parties, State of Delaware, Delaware Code Online (accessed Oct 20, 2026)
- 6 Del. C. § 18-303, Liability of members and managers to third parties, State of Delaware, Delaware Code Online (accessed Oct 20, 2026)
- 6 Del. C. § 18-1101, Construction and application of the LLC act and agreements, State of Delaware, Delaware Code Online (accessed Oct 20, 2026)
- 6 Del. C. § 18-702, Assignment of limited liability company interest, State of Delaware, Delaware Code Online (accessed Oct 20, 2026)
- 17 CFR 230.506, including the bad actor rule (506(d)), eCFR, U.S. Government Publishing Office (accessed Oct 20, 2026)
- 26 U.S.C. 469, Passive activity losses and credits limited, Legal Information Institute, Cornell Law School (accessed Oct 20, 2026)
- Publication 925, Passive Activity and At-Risk Rules, Internal Revenue Service (accessed Oct 20, 2026)
- Form 1-K, DF Growth REIT II, LLC (fee table, including guaranty fee), SEC EDGAR (Jul 10, 2024)
- ILPA Principles 3.0: key person and GP removal, Institutional Limited Partners Association (2019)
- Private equity real estate co-investment structure, Crowd Street (formerly CrowdStreet) (accessed Oct 20, 2026)
- Top 10 capital call FAQs, Crowd Street (formerly CrowdStreet) (accessed Oct 20, 2026)
- Capital call defaults (NYREJ reprint), Thomas Kearns, Olshan Frome Wolosky (Jul 28, 2026)
- Understanding for-cause removal provisions in real estate joint ventures, Bret R. Salzer, A.Y. Strauss, via Mondaq (Mar 4, 2025)
- How Relli works, Relli (accessed Oct 20, 2026)
