What is a co-GP in real estate?
Short answer
A co-GP in real estate is a second party who shares the management of a deal with the main general partner. The GP finds the deal, structures it and runs it. A co-GP joins at that level, often in a limited role and sometimes as a 50/50 partner. The split depends on what each side brings. Many sponsors talk to a securities attorney about how to structure this.
Start with the normal setup. A general partner finds a deal, structures it and runs it. Limited partners come in and put up capital. They are generally passive investors. The general partner usually has more at stake and often puts some of their own capital on the line.
A co-GP changes who sits on the general partner side. At the management level of the deal, you bring in one or two other parties to work on the project with you. I put it this way in a webinar we ran at Family Office Club.
"You bring in one or two other parties to kind of joint venture on the project, in a limited way, a very limited way, or a very broad and open way."
How the split between co-GPs gets decided
Sometimes it is a 50/50 partnership right down the middle. Many times it has to be customized. The terms should match what each party contributes and what the deal needs to succeed. One partner might bring the deal. Another might bring the investors. A third might run the asset after closing.
I would not copy a split from someone else's deal. Write down who does what, who funds what and who decides what. Many sponsors also talk to a securities attorney before anyone signs. This is general information and not legal advice.
Why a sponsor brings in a co-GP
In that same webinar I gave a few reasons to consider a joint venture or co-GP structure. The first is speed. It could be speed to reach 100 million in assets, or speed to execute when the timing is right for a distressed opportunity. The second is focus.
This clip covers speed and focus as reasons to partner, including doing only what you are best at.
You may be great at development, at negotiating an acquisition, at lining up financing or at running a company after it is bought. You may not want to deal with the capital raising or the structuring. A co-GP lets you hand off the parts you do not want and get more deals done by focusing on what you do best.
There is also access. If your bottleneck is deal flow or investors, a partner who already has that access can solve it. I also see momentum matter. If your team and your partners feel you are not getting anywhere, you can lose their trust as a leader. Opening up to partnership options can restart that.
What to check before you add a co-GP
Look for someone who is complementary to your core skills. A partner with the same strengths as you may add less than one who covers a weak spot of yours.
- Which part of the deal is slowing you down right now
- What each partner will contribute in time, capital and relationships
- Who has final say on major decisions
- How profits are split and whether the split fits each role
The terms you choose can also affect how the deal is offered to investors. Many sponsors talk to a securities attorney about that. We at Family Office Club have been working with investors and capital raisers for 19 years. In my experience, deals tend to move more easily when each partner knows what they own.
On the record
- In the traditional structure, the general partner finds the deal, structures it and runs it, while limited partners usually take a more passive role.
- A co-GP split can be 50/50 right down the middle, but many times it is customized to what each party contributes.
- Speed is the first reason I give for joint ventures and co-GP deals, including speed to reach 100 million in assets.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club, Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around co-GP structuring, partner roles and splits and investor offering rules. Do not use AI to write your own legal agreements.
Where to start
- Name the one task on your deal that you want to hand off.
- List the skills, capital and contacts a partner would need to bring.
- Draft a simple one page outline of roles and the proposed split.
- Consider talking to a securities attorney about the structure before you talk to investors.
- Meet two or three possible partners before you commit to one.
More questions on this
Is a co-GP the same as a joint venture?
They are close. A joint venture is the broader idea of partnering with complementary parties. A co-GP is a joint venture at the general partner level of a deal.
Does a co-GP have to be a 50/50 partner?
No. It can be a very limited role or a broad one. Many times the terms are customized to what each party contributes and what the deal needs.
Do limited partners take the same risk as a co-GP?
In the traditional structure, limited partners usually take a more passive role. The general partner side usually has more at stake and often puts some of its own capital in.
Related questions
- What do capital partners expect from an operating partner?I would say capital partners expect three things from an operating partner.
- How do I structure a JV between a sponsor and capital partner?Start with who does what.
- How do I find a joint venture equity partner?Start by naming your bottleneck, whether that is deal flow, investor access or deal setup.
- How should I split ownership with a money partner?Start with a preferred return for the money partner, then split the back end profit.
Work through it with the investor meeting follow-up checklist. See all co-gp and joint venture deals resources.