These partnerships are most often formed to purchase large investments such as commercial office buildings, land, apartment buildings or shopping centers. Although limited partnerships have had poor track records recently, as the market begins to improve, the big money will be made in these partnerships. There are many investors with small sums of money vying for real estate investments. Another reason why these partnerships will do very well in the upcoming market is the type of investments best suited for these partnerships are selling at the greatest discounts. It is not unusual to see an office building selling at 40 percent to 50 percent of its market value.
Land also offers an excellent opportunity.
With the growing new-home market there is a larger demand for finished building lots. Many developers, having been wiped out, know the opportunities exist but lack the funds to capitalize in them. Although partnerships offer great opportunities, you must make certain to understand the risks. One risk is that while there is no management involved, you have no control over the investment because you are turning the decision-making process over to an individual or corporation. Another risk is that partnerships are illiquid and should only be made by sophisticated investors who have no need for liquidity.