Salt Lake City, UT · Member since 2021 · 25 posts · 23 votes
Hello multifamily investors! I'm very interested in multifamily investment, and want to hear about your opinions.
As I'm new, I'm investing as an LP. I believe it's a good way to experience multifamily investing. But at one point, I'd like to be KP who can lead the deal from start to end. Do you think I should just use the money to buy smaller deals rather than investing as an LP?
Another question is finding deals. What do you usually use to find the deals?
Investor · Idaho Falls, ID · Member since 2016 · 912 posts · 629 votes
5y
@Brian Choi Starting as an LP is a good idea to help learn more about the process. To be a KP on the deal generally requires a very high net worth to be able to guarantee the payments. I suggest keeping with being an LP on a couple of deals, then maybe try to work into being a GP on a few before looking to be a KP. It is good to have a track record of successful deals to be a KP as well.
Investor · Idaho Falls, ID · Member since 2016 · 912 posts · 629 votes
5y
@Brian Choi Starting as an LP is a good idea to help learn more about the process. To be a KP on the deal generally requires a very high net worth to be able to guarantee the payments. I suggest keeping with being an LP on a couple of deals, then maybe try to work into being a GP on a few before looking to be a KP. It is good to have a track record of successful deals to be a KP as well.
Investor · Houston, TX · Member since 2020 · 7 posts · 2 votes
5y
I agree with Don - being an LP is the simplest way to get exposure and learn aspects of the business - how was the deal presented, underwritten, how has it performed, how does the operator handle communications, etc. It's how I started many years ago before shifting to the GP side. It all depends on your personal goals on if you want to take an active role/syndicate, want to buy your own stuff, or just be a passive.
Rental Property Investor · Killeen, TX · Member since 2017 · 337 posts · 100 votes
3y
@Brian Choi hello! and good for you to get started on the LP side. I think most investors who want to syndicate should do a couple of LP deals first.
First things first, a lead GP is different than a KP. This is a very down-the-road topic but the idea is what is your main goal for jumping into real estate? I know a very successful GP whose ultimate goal is to become a KP. The reason is that he wants to spend more time with his kids and fly his plane. All his involvement in the deal is put his balance sheet on the line and get a fee for it. That's the dream for him.
I also know amazing lead GPs who find it fun leading teams and enjoy challenging projects.
I guess the answer would be to try a couple more LP deals then be a co-sponsor on 2 or 3 deals to see how each role plays out. You don't know what you don't know. You might want a position but once you are there, you end up not liking it.
I hope this helps and I wish you the best of luck in your investing journey!