1. All limited partnerships have at least one general partner and one or more limited partners.

2. General partners have operational control and bear unlimited liability for partnership obligations.

3. Limited partners receive all those investment benefits that typically accrue to real estate investors, and may reap additional advantages which may result from choosing this form of participation.

1. Potential investor benefits include tax shelter, equity buildup through repayment of mortgage loans, appreciation in property values, cash flows from operations and from the net proceeds of refinancing, and so forth.

2. Limited partnerships make real estate investments affordable to individuals with limited capital resources and little or no real estate experience.

3. Limited partnerships offer investors a number of benefits that would be difficult to obtain through direct real estate ownership. These include limited liability for obligations spawned by the venture and economies of scale combined with small initial equity investments.

4. Investment units in limited partnership ventures sold to the general public are often priced as low as $500 each, with a minimum subscription of as few as five units.

5. Investing in a limited partnership that acquires a heterogeneous real estate portfolio can accomplish diversification objectives that for individual owners might require hundreds of thousands, or even millions, of dollars.

6. Property search and negotiating skills are crucial elements in consistently favorable investment performance. Large-scale promoters of limited partnership ventures usually employ a staff of specialists who quickly gain experience and may be particularly adept at finding properties and structuring transactions on favorable terms.

7. Investment in real estate limited partnerships also provides individuals with access to professional property managers. While limited partners indirectly pay for this service, they need not spend time arranging and monitoring management performance, as must those who invest as individual owners.

1. Investors who find themselves facing an unexpected need for cash resources may find it impossible or prohibitively expensive to liquidate their limited partnership ventures.

2. Many ventures in which the public are invited to participate (called public offerings) involve raising large pools of equity funds which are subsequently invested in a diverse menu of properties, none of which have yet been identified.

3. Actions taken by general partners, over which limited partners have no control, may deprive all the partners of expected favorable income tax treatment. These issues are covered in Chapter 11, and include:

4. Losses from limited partnership interests are passive asset losses, and can only be used to offset passive asset income or when the related passive asset is sold.

1. The Uniform Limited Partnership Act has been adopted in every state except Louisiana, albeit in some cases in highly modified form.

2. Limited partnerships owe their popularity in large part to their special status under the Internal Revenue Code. Unlike corporations, partnerships are not taxable entities. Partnership income or losses are reported directly by individual partners. For this reason, partnerships are frequently called tax conduits and have become the favored ownership entity for investments that generate tax deductible losses during the early years of operations.

3. Limited partnership shares are considered securities just as are corporate stocks and bonds. As securities, they are potentially subject to both federal and state securities laws.

4. Escaping registration at the federal level does not always ensure that an offering will not have to be registered with a state securities commission.

1. Securities regulations require that a potential investor be supplied with a prospectus or offering memorandum that fully discloses the nature of the offering. These are designed to satisfy full disclosure requirements, which stipulate that they must contain information sufficient for investors to intelligently evaluate the offering.

2. In addition to the prospectus, potential investors are usually given a copy of the partnership agreement that defines the relationship between limited and general partners as well as the rights and responsibilities of each.

3. Investors also sign a subscription agreement which spells out the nature of the relationship between limited partners and the sponsoring general partner.

4. Private placements or intrastate offerings may also require potential investors to fill out a questionnaire designed to assess their ability to qualify as limited partners.

1. Limited partnership promoters, commonly called syndicators, may first acquire a property interest and seek investors. Just as frequently, they start with a pool of investors and seek an appropriate property. 

2. While investors in specified asset syndications have an opportunity to evaluate the property or properties as well as the promoter, those who put funds into a blind pool have only the promoter's track record to guide them in making their investment decision.

1. Sponsors range from large firms that specialize in this particular activity, to major real estate companies and securities firms who find it a profitable sideline.

2. Prospective sources of financial benefits from sponsoring real estate limited partnership ventures include, among others, organization fees, reimbursement of expenses, property acquisition fees, property management fees, leasing commissions, brokerage commissions, and insurance commissions.

1. These are much like other limited partnerships, except that their shares are designed to be readily transferable and are traded like shares of stock.

2. Section 7704 of the Internal Revenue Code provides that Master Limited Partnerships formed after December 17, 1987 will be taxable as corporations, and those formed before that date will be taxable as corporations after 1997.