Real estate partnerships allow investors to pool financial resources, knowledge, expertise to acquire, develop, manage and profit from properties. Partners contribute capital and receive proportional ownership interest. By pooling resources, partners access larger, more lucrative opportunities beyond individual capacity.
Differences from Sole Proprietorships
Partnerships differ from sole proprietorships. They must file taxes as an entity and report each partner’s income. Partnerships allow more capital to invest in higher-value properties.
Legal Ownership and Fiduciary Duties
A property acquired by partners using contributed capital is legally owned by the partnership. Partners owe fiduciary duties to the partnership and each other. Investing in rental properties can provide capital growth, cash flow and tax benefits. However, wrong investments become financial burdens.
Most partnerships are formed alongside real estate attorneys. State laws define main characteristics of partnerships.
Investment Partnership Operations
Real estate partnerships are structured to enable shared ownership.
How an Investment Partnership Works
By contributing capital, partners acquire a proportional ownership interest in the property and have the ability to access opportunities that may be beyond their individual capacity.
Risks of a Real Estate Limited Partnership (RELP)
Investing in real estate partnerships comes with risks, including wrong investments becoming financial burdens. Partnerships offer the chance to pool financial resources, expertise, and labor to acquire, develop, operate, and sell properties for profit.