Real Estate Acronyms: GP v LP

Every industry suffers from jargon and real estate isn’t immune. Perhaps real estate is one of the worst offenders. I recently sent out a newsletter that referenced “GP” and “LP” to which I received a note back from a reader asking what these stood for/meant.

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Getting back on topic, real estate used to be commonly acquired with a partnership. Today, partnerships have been replaced with LLCs in many cases, but the acronyms of GP/LP have hung around.

In the partnership, the general partner, or GP, is the person or persons responsible for putting the deal together including assembling the debt (signing on the mortgage) and the equity and then running the deal.

The limited partner or LP was/is a passive investor or silent partner. It’s someone who puts in some investment money but whose maximum potential out-of-pocket losses are limited to the amount of dollars they invest in the deal.

So that’s a quick rundown on the primary roles in real estate syndications.