Real Estate Limited Partnerships: Exploring The Pros And Cons

There are many benefits that come along with investing in the real estate market. For instance, these investments will often provide for a fast return on your money or the ability to create a residual income. However, there are also some downsides to investing in this market. For example, purchasing real estate will often require more capital than many people have available to invest at one time.

Thankfully, real estate investment companies, such as a real estate limited partnerships, can help to address these issues and make it possible for just about anyone to enjoy the benefits that come along with investing in real estate. Below you will learn more about the pros and cons that come along with investing in these limited partnerships so that you can decide for yourself if this is the right type of investment for you.

The Pros

• Minimal Investment - Many real estate limited partnerships will not require you to make a minimum investment. Consequently, you will be able to take advantage of this investment opportunity regardless of whether you are looking to invest $10 or $10,000,000.
• Limited Liability - Limited partnerships allow for the separation of their investors and their corporate debts. What this means is that you cannot be held legally liable for any debts that the partnership incurs which exceed the value of your investment. In layman's terms, while it is possible to lose the money you invest, your personal assets are protected from loss when taking advantage of this investment opportunity.
• Real Estate Expertise - Nearly all real estate limited partnerships will be headed up by an expert in the real estate market. The expertise this individual possesses will allow you to ensure your money is being invested in property that is most likely to offer a positive return.

The Cons

• Limited Decision Making Power - Since investors in these partnerships will be protected by limited liability laws, they will also enjoy a very limited amount of decision making power. Consequently, the investments that the partnership decides to make will be outside of your control.
• Limited Opportunity To Learn - If you are looking to build your own real estate empire, investing in real estate companies may not provide you with the opportunity to learn more about the market. Since you are not intimately involved in the decision making process, you will likely learn little about what it takes to make these investments on your own.

The Bottom Line

If you are looking for a way to minimize your risk while also enjoying the benefits of investing in real estate, choosing to make your investments through a real estate limited partnership can prove to be an ideal opportunity. However, if you are looking to invest in select types of real estate or wish to learn more about the process of making private real estate investments, this may not be the right investment opportunity for you. (Jakob Pek Fund)