Terminology for Multifamily Investing
LP is a Limited Partner also known as a passive investor. A limited partner has a limited liability. LP is basically responsible for bringing capital to the deal, and earn true passive income.
GP means a General Partner/ an operator/ or a syndicator. GPs are responsible for qualifying the market, meeting with brokers, finding the property, coordinating the prospectus, attracting investors, operating the property. Enormous amount of responsibility on their shoulders. 😵💫 GPs also participate as LPs as well in most cases.
👇 Residential multifamily
is 2-4 units in one building.
👇 Commercial multifamily
any residential property that is more than five units.🏢 The main difference from residential multifamily is how they are valued. A residential property is generally valued based on the recent sales in the area, a number of bedrooms/ bathrooms/ school districts so on, while a commercial multifamily is valued as a business, therefore the stream of revenue generated by the property is a significant factor how much a multifamily property is worth, in addition to the recent sale comparables. That’s why cash flow is crucial.
means “pooling resources” together amongst a group of people to go after a particular asset, it can be a hotel, a yacht, the White house lol. Short term rental in the White House. 🧐 😆
is an individual with an income of at least $200,000 per year or a $1 million net worth (without your primary residence). For married couples, combined income more than $300,000 per year.