“All investments are good investments,” said no one ever. When it comes to investing, you need to be wise and select the right investment opportunity that will help you reach your financial goals. If you’re aiming to earn good returns while taking on the least risk possible, an investment in real estate may be your best option, especially if you’re a conservative investor looking to safeguard your principal investment. It may actually even be the best way for you to earn high returns on your investment.
Not all real estate investments are the same, however. Some are riskier than others. But if you do decide to invest in real estate, there are options to choose from. Limited Partnerships (LPs) have emerged as a reliable way to invest in real estate investment opportunities over the past few years. It provides liability protection for investors (aka limited partners), which is a favorable option for those who prefer low risk investing.
In a Limited Partnership, you will have one general partner and one, or more limited partners. As the case with Jakob Pek Fund, accredited investors may invest a certain amount of money in a real estate venture for a limited period of time, under the guidance of the general partner (Jakob Pek Fund). Accredited investors are then considered limited partners. Not having to worry about the liabilities of the venture, the limited partner is solely responsible for their investment, while the general partner remains liable for any debts the business may incur, alongside managing the daily operations. For the limited partner, any interest accrued over the life of the investment is paid out when the investment reaches maturity.
When a limited partnership is formed, a legal agreement stating all the rightful claims for returns is usually presented to investors in the form of a promissory note for complete clarity.
Before investing in a limited partnership, make sure you are provided with all legal agreements outlining possible risk, details and partnership breakdown. It is also important to become familiar with any policies and practices of the general partner.
Important questions to ask the general partner before investing in a limited partnership are:
How is interest calculated?
Does the company accept cash, securities, wired money, etc.?
How is my capital invested?
What is my liability?
Are there any fees associated with my investment?
Limited partnerships are undoubtedly a more secured way to invest and earn returns over time. However, you must do your due diligence to ensure you are partnering with a responsible, general partner.