Who invests the majority of the capital?

• A. Limited Partner
• B. General Partner
• C. Sponsor
• D. Lender

Answer: (A)

The main idea is who funds the equity in a real estate investment partnership. In these structures, the majority of the equity comes from Limited Partners. They are the passive investors who commit most of the capital needed to acquire and develop property, while the General Partner or sponsor contributes a smaller equity stake to align incentives and then manages the deal. Lenders provide debt financing, not equity, so they aren’t part of the equity capital pool. Because the sponsor’s role is to structure and operate the project, they typically participate with a smaller equity share and earn a carried interest rather than supplying the bulk of the capital. That’s why Limited Partners are the primary source of the equity investment.