Check out this 5-minute video that describes how multifamily investing works at a high level. I use an analogy that I heard recently from a colleague of mine, Harry Nima, as I thought it was a very simple way to describe the concept for new passive investors.
There are three main concepts defined in the video:
- Limited Partner – The passive investor like yourself who’s activity is limited to investing in a multifamily deal and lets experts do the work. For every investment, there are usually many limited partners who represent a piece of the pie.
- General Partner – The active individual that does the work to find, analyze, form a business plan, execute the purchase, and manage the investment to achieve the desired returns. There’s almost always a team of General Partners (GPs) that play unique and specific roles based on their strengths.
- Syndication – The is the approach of pooling a large amount of investing dollars from both Limited Partners (LPs) and General Partners (GPs) to purchase an investment property.
I hope you enjoy the video!