Can We Put An End To This Co-GP Nonesense

[Stuart Udis]

We need to have a serious conversation about the overuse of Co-GP titles in multifamily syndications. There was just a post from someone who described themselves as handling acquisitions and diligence while looking to “align” with others to fill the remaining roles in a 10–30 unit syndication. The post was removed shortly after going live, likely because it belonged in the classifieds. But the underlying issue is far more important than where it was posted.

If you source a deal, collect a finder’s fee or a brokerage commission.

If you advance deposit or escrow funds, structure it as a reimbursable advance with a fee or preferred return. (Not to mention the GP should be capable of funding escrows themselves).

If you assist with management or operations, collect a management fee or a consulting fee.

None of these roles require a General Partner title. The Co-GP designation should be reserved for individuals who can actually carry a syndication. Instead, GP titles are increasingly used as a substitute or as additional compensation. Those titles are then recycled into bios, websites, and pitch decks to imply operating experience that does not exist. This creates a distorted marketplace where perceived track records are inflated and investors are misled.

There is no operational, legal, or economic justification for awarding GP titles for tasks that can be clearly defined, properly compensated, and fully disclosed as services. Earning fees, gaining experience, and learning the business are all legitimate paths. But conflating service roles with sponsorship is unhealthy for the industry. Clear roles, clear compensation, and honest disclosures protect everyone involved, especially investors.

Until we stop inflating résumés with deceptive titles, these problems will continue to repeat themselves.

[Todd Dexheimer]

I get where you're going and agree to an extent. The guys and gals going around touting that they own $300mm in real estate, but really own 1% of $300mm is the issue. That's just plain deceitful. 

The practice of gaining ownership based on doing certain things is not the issue. That is good for both the GP and the Co-GP. If someone finds a deal and wants to keep a small portion of the ownership profits, good for them. If they bring other value and want a slice of the pie instead of a commission, that's great. If it works for the GP and that person, then it's a win for everyone, just be honest with your role.