How a General Partner Makes an Offer on an Apartment

Investing in multifamily real estate requires strategy, and for those looking to become General Partners (GPs) in a deal, understanding how to structure and present an offer is crucial. Whether you're syndicating a deal or investing alongside limited partners, knowing how to analyze, negotiate, and secure an apartment complex can make or break your investment success. Let’s walk through the key steps a GP takes to make a winning offer.

Step 1: Deal Sourcing and Underwriting

The first step in making an offer is finding the right property. General Partners typically source deals through:

✔ Broker relationships – Networking with commercial real estate brokers who have access to off-market deals.

✔ Direct-to-owner outreach – Contacting property owners directly to gauge interest in selling.

✔ MLS and listing platforms – Searching LoopNet, Crexi, and CoStar for listed properties.

✔ Wholesalers and investor networks – Tapping into industry connections for leads.

Once a potential property is identified, the GP conducts underwriting, a deep financial analysis to ensure the deal is viable. This includes:

• Analyzing current income & expenses to determine Net Operating Income (NOI).

• Reviewing rent comps to assess upside potential.

• Factoring in operating costs, financing terms, and exit strategies to calculate expected returns.

Step 2: Securing Financing & Structuring the Deal

Gaining an understanding of financing options is key to crafting an offer. GPs typically work with:

• Traditional lenders for conventional loans.

• Agency loans (Fannie Mae, Freddie Mac) for larger deals.

• Bridge loans for value-add properties requiring renovations.

• Private equity partners for additional capital.

At this stage, the GP determines how the deal will be structured, typically with Limited Partners (LPs) contributing capital while the GP manages the investment.

Step 3: Crafting a Competitive Offer

In a competitive market, an attractive offer isn't just about price. GPs must consider:

✔ Earnest money deposits – A higher deposit signals serious intent.

✔ Due diligence timelines – A shorter inspection period can appeal to sellers.

✔ Financing contingencies – Minimizing contingencies makes an offer stronger.

✔ Seller concessions – Negotiating repairs or credits effectively.

✔ LOI vs. PSA – Most deals begin with a Letter of Intent (LOI) before proceeding to a Purchase and Sale Agreement (PSA).

Step 4: Due Diligence and Closing

Once the offer is accepted, the GP moves into the due diligence phase:

• Physical inspections – Checking for structural, plumbing, electrical, and roofing issues.

• Lease audits – Reviewing tenant leases to confirm income and potential risks.

• Market analysis – Ensuring economic and rental trends align with projections.

  
  

If everything checks out, the GP proceeds with closing, finalizing loan agreements, and onboarding property management.

Bottom Line

Making an offer as a General Partner requires financial expertise, strategic negotiation, and market insight. The more deals you analyze and pursue, the stronger your ability to identify profitable investments and structure winning offers.

📢 Want more expert insights? Check back every Thursday for new posts on multifamily investing strategies, market trends, and wealth-building tips.

FAQ

Q: How much capital does a GP typically invest in a deal?A: It varies, but most GPs invest 5-10% of the total equity to show commitment while raising funds from LPs.

Q: What happens if a GP overpays for a property?A: Overpaying can shrink investor returns. Strong underwriting and negotiating skills are key to avoiding this mistake.

Q: How can new investors become a GP?A: Start by networking, learning underwriting skills, partnering with experienced investors, and building broker relationships.

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