What is the difference between a GP and an LP?
In a real estate syndication, the general partner (GP) sources and runs the deal, while limited partners (LPs) are passive investors who provide most of the equity.
The GP, or sponsor, finds the deal, arranges financing, executes the business plan, and manages the asset day to day. LPs contribute capital and stay passive, sharing in the returns without operational control or liability beyond their investment.
Returns are typically split through a waterfall: LPs often receive a preferred return first, then profits are shared, with the GP earning a larger "promote" or carried interest above set hurdles. The GP also commonly earns acquisition and management fees.
Why it matters
The GP/LP split defines who does the work, who carries the risk, and how the upside is shared. It is the backbone of the raise an OM is built to support.
Where it shows up in your OM
omgen drafts the OM a GP uses to present a deal to prospective LPs. The deal structure, splits, and terms are yours to enter and approve. omgen markets the opportunity; it does not structure the partnership.
Frequently asked questions
- What does a general partner do versus a limited partner?
- The general partner (sponsor) sources, finances, and operates the deal and carries the active risk. Limited partners invest capital passively and share in returns without managing the asset.
- How do GPs and LPs split returns?
- Commonly through a waterfall: LPs receive a preferred return first, then remaining profits are split, with the GP earning a larger promote above agreed hurdles. The GP often also earns acquisition and asset-management fees.
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