Tee Corley

There are several kinds of business partnerships commercial real estate investors can enter into, with a general partnership being one of the most common. While a general partner business model is affordable to set up and extremely flexible, it has the potential to burden partners with hefty personal liabilities. That’s why it’s paramount to know how to properly form a general partnership, choose your partners wisely, and efficiently organize your partnership for maximum results and protection.

I very often get asked to look at deals on behalf of investors. And I’ll very often get a comment like this: “I think it is a good deal because the operator is offering me a 10% preferred return!” It is understandable why an investor would say something like this, but there are clearly two misunderstandings at play. The first misunderstanding relates to what a preferred return is.

If you’re entering into a partnership agreement with an investment firm, you’re right to do your due diligence on private equity capital calls. Capital calls can happen at any time, which increases your risk for bad deals. However, there are benefits to capital calls, too. In this article, we’ll define capital calls, explain how they work, go over pros and cons, and provide expert insights into what they mean for investors and investment firms. What Are Capital Calls?