100% Ownership or GP/LP Partner? Two Ways to Own a Toronto Multiplex

There are two honest ways for an ordinary investor to own a piece of a Toronto multiplex development. You can own the whole thing, or you can own a share of it alongside a partner who runs it.

Both work. They suit different people, different amounts of capital and — most importantly — different appetites for being responsible when something goes wrong on site at 7 a.m. on a Tuesday.

This is how each one is actually put together.

Route one: 100% ownership

You own the land. You own the project. You own the building and every dollar it produces.

What makes this workable for someone who is not a developer is the delivery method: a turnkey, fixed-price build contract with a general contractor whose core business is multiplexes. Under that contract the builder carries the construction cost risk, not you.

What a turnkey contract covers

Stage	What the builder handles
Feasibility	Zoning review, unit yield study, underwriting the whole project
Entitlement	Permits, and where applicable the Committee of Adjustment strategy
Consultants	Planners, zoning consultants, architects, engineers, surveyors
Financing	Construction facility, staged draws, and arranging the CMHC takeout at stabilization
Construction	All trades, general contracting, project management, builder's risk and wrap-up insurance
Lease-up	Occupancy, tenanting, stabilization, and property management if you want it

Draws are funded by the lender on a cost consultant's inspection sign-off, which is your independent check that the work is actually in place before money moves.

What you keep, and what you carry

On the seven-suite budget in our cost breakdown: about $1.32M of equity created at stabilization, roughly 83% of capital returned at the CMHC refinance, and ongoing free cash flow after debt service. All of it yours.

Against that: you need the land and the equity behind a construction loan. You sign the guarantees — lenders ask a developer for completion, cost overrun and environmental covenants, and on a single-owner project, that developer is you. And if the market turns during your lease-up, it is entirely your problem.

This route suits someone who already owns a suitable lot, or who has the capital and wants the whole outcome.

Route two: GP/LP participation

The second route is a limited partnership. You come in as a limited partner alongside other investors; a general partner corporation runs the project.

The pieces

Entity	Role
The Limited Partnership	A separate legal entity formed under Ontario's Limited Partnerships Act. The wrapper that holds the deal. The GP and the LPs are its partners.
The LP Agreement	The rulebook. Who controls what, how profits split, voting rights, reporting, exits. Signed by the GP corporation and each LP.
The General Partner	A corporation that runs the deal day to day and carries unlimited liability for it. The sponsors act through the corporation, never personally.
The Nominee	A single-purpose corporation that holds legal title so the LPs are not all on title. No decision-making power; beneficial ownership stays with the partnership.

Why this shape? Four reasons, and they are all practical.

• Liability containment. The GP corporation carries the construction and financing risk. As an LP, you risk only what you invest.

• Phased entitlement without restructuring. A Phase 1 four-plex-plus-garden-suite build and a Phase 2 Committee of Adjustment application to six units can both proceed inside one LP Agreement, without reorganising investors between phases.

• Lenders prefer it. Construction lenders know the LP/GP model for ground-up development. Using the format they underwrite every day strengthens the financing story.

• It is the cleanest vehicle for private capital. Accredited Investor and Family, Friends and Business Associates exemptions allow a raise from a close network without a public offering.

How it compares to the alternatives

Structure	Liability shield	Lender view	Raising capital	Scale
Personal	None	Fine for 1–4 units	Poor	Small
Corporation (SPV)	Corporate veil*	Familiar	Private shares	Small to mid
Co-ownership (JV)	Contract only	Mixed	Limited	2 to 4 parties
LP with GP corp	LPs limited**	Preferred for development	Best: private placements	Mid to large

* Lenders can still ask directors for personal guarantees. ** The GP carries the liability, which is why the GP is a corporation.

How the money flows

Capital in a typical structure is contributed 90% by the LPs and 10% by the GP. The lender funds the balance through construction draws, with interest paid from an interest reserve. The GP having its own money in the deal is not a detail — it is the alignment.

The distribution waterfall

Cash is distributed in a fixed sequence. LPs are paid first; the GP is rewarded for performance through a promote at the end.

1	Expenses, debt and reserves. Paid in full before anything else moves.
2	Return of capital. 100% pro rata to LPs and GP until every dollar of contributed capital is repaid.
3	Preferred return. A priority annual yield — 8% in the structure we see most often — to LPs and GP on invested capital, adjusted as capital is returned.
4	Profit split. Remaining net profit, typically 80% to LPs and 20% to the GP, with the possibility of a further tiered promote.

A tiered promote structures the GP's share so it rises only if the project outperforms. One arrangement we have seen:

Hurdle (net profit against capital invested)	LP / GP
Up to the hurdle	90 / 10
On the next increment	70 / 30
On amounts beyond that	60 / 40

The GP earns a larger share only after the LPs have received their capital, their preferred return and the bulk of the base profit. That is the correct order of operations, and it is worth checking in any structure you are shown.

An illustrative outcome

To show the mechanics — and this is arithmetic on one project's assumptions, not a projection for any other deal — take a project with $1.2M of total equity ($1.08M LP, $120K GP) and net profit after disposition of $2,227,930 over a five-year operating period:

	LPs	GP	Total
8% preferred return over five years	$207,360	$23,040	$230,400
Profit split after preferred payouts	$1,598,024	$399,506	$1,997,530
Total profit distributions	$1,805,384	$422,546	$2,227,930
Share of distributions	81%	19%	100%

Adding returned capital, the LPs receive $2,885,384 in total — an equity multiple of about 2.67× on $1.08M, and an illustrative IRR in the high twenties on assumed timing. The assumptions behind that IRR matter enormously: 65% of capital returned at the twelve-month refinance, the preferred paid annually on the reduced balance, no free-cash-flow distributions during the hold, and the balance distributed on disposition after a five-year operation.

Change any of those and the number changes. Treat it as a worked example of how a waterfall behaves, not as a forecast.

The obligations on each side

What the GP does

• Feasibility and underwriting of the entire development

• Managing the Phase 1 to Phase 2 entitlement strategy: permits and the CoA submission

• Sourcing LP investors and ongoing investor relations

• Arranging financing, including the CMHC takeout at stabilization

• Retaining legal, accounting, third-party experts and the development team

• Managing planners, zoning consultants, architects, engineers and surveyors

• Coordinating all trades, general contractors and project managers

• Contracts, reporting, and communication and transparency to the LPs

What the LPs do — and must not do

The duties are short: fund capital calls on time and by the method set out in the LP Agreement; make truthful representations about accredited status, source of funds and KYC; and disclose conflicts, with no side deals that circumvent the agreement.

The prohibitions matter more, because they are what protects you:

• No directing contractors, lenders, city staff or property managers.

• No signing authority on project bank accounts.

• No presenting yourself as management. Everything routes through the GP.

This is the central trade of the structure. Stay passive, stay protected. Limited liability depends on limited participation in management. An LP who starts running the job can put their own liability shield at risk.

The honest cons

A GP/LP is not free of drawbacks, and any sponsor who tells you otherwise is selling.

• More paper. An LP Agreement, a GP corporation, a nominee corporation, subscription documents. Legal and accounting cost real money before anything is built.

• You must stay passive. If you want to make construction decisions, this is the wrong structure. Consider 100% ownership instead.

• Securities compliance on every raise. Exemptions, filings and records. It is manageable, and it is not optional.

• Illiquidity. LP interests are not traded. Your capital is committed for the term of the deal.

On guarantees: lenders ask the GP for covenants on completion, cost overruns and environmental matters. LPs are not normally asked to guarantee the debt, though in rare circumstances a lender may mandate it. Ask the question directly before you subscribe.

How to choose

If you...	Then
Already own a suitable Toronto lot	100% ownership. Your largest cost is already paid for at a historic basis.
Have the capital and want the whole outcome	100% ownership, with a turnkey fixed-price contract.
Want development exposure without becoming a developer	LP. Capped downside, defined waterfall, no operational role.
Want to diversify across several projects	LP. Smaller positions in more than one deal beats one concentrated bet.
Need certainty about when your money comes back	Neither, yet. Development capital is committed capital. Have that conversation first.

How VIP Condos Toronto helps close the gap

We are not the builder and we are not the general partner. We are the brokerage that has done the vetting, and that is the value we bring to this.

Our bench of contractors and consultants is pre-vetted for the thing that actually matters: whether they build multiplexes as their core business, repeatedly, with standing crews and common plans — or whether yours would be their first. One GP corporation we work with is operated by a principal with more than thirty years of construction and development management experience, whose related entities have delivered over three million square feet and more than $5 billion of development value, and which is now structured as a vertically integrated operation dedicated to multiplex projects: planning, development, financing, construction, lease-up, stabilization, operation and sale.

We do not publish our partners' corporate names here. If you are weighing a project and want to know exactly who you would be building with — the principals, the completed projects and the references — contact Frank Merigliano directly at 416-885-0172 or frank@vipcondostoronto.net and we will make the introduction.

We introduce clients into that bench either as 100% owners with a turnkey fixed-price contract, or as limited partners in a GP/LP structure. We will tell you honestly which one fits your situation, including when the answer is that neither does yet.

Related reading: Toronto's Multiplex Playbook for 2026.

Frequently Asked Questions

Do I need to be an accredited investor?

Not necessarily. Raises typically rely on the Accredited Investor exemption and the Family, Friends and Business Associates exemption, and the FFBA route does not depend on income or net worth. Which exemption applies to you is a question for the sponsor's counsel, and it is settled before you subscribe, not after.

Who holds title to the property?

A nominee corporation holds legal title on behalf of the partnership, so the LPs are not all registered on title. The nominee has no decision-making power; beneficial ownership stays with the LP.

When do distributions happen?

Distributions can arise at several points: close-out of unused contingency and released holdbacks, rebates and credits such as HST and GST credits or development charge adjustments, capital events including the takeout refinance and any partial sale, and operating free cash flow during the hold once debt service, occupancy and reserve tests are met.

What happens at the end?

Two choices, made under the LP Agreement: sell the stabilized asset, or refinance and hold for cash flow, debt paydown and capital appreciation. A well-drafted agreement sets out who decides and on what basis, before anyone's money is in.

Is any of this an offer to invest?

No. This article is educational. Any actual investment would be made through subscription documents, with a limited partnership agreement, disclosure and independent legal and tax advice. Ask for all three.

This guide is for general informational purposes and does not constitute legal, financial, investment, or tax advice, and is not an offer or solicitation to buy or sell any security. The illustrative figures shown are arithmetic on one project's stated assumptions, not a projection or guarantee of returns on any investment. Development investments carry risk of loss, including total loss of capital, and are illiquid. Every situation is different — always consult a licensed real estate professional, lawyer, and tax advisor before making any decisions.

Ready to Take the Next Step?

Create your free, secure account at www.VIPCondosToronto.net for full MLS access, real-time sold data, and VIP pre-construction pricing and floor plans — the same tools our team uses every day.

For personalized advice on your specific Toronto buying or selling situation, contact Frank Merigliano and the VIP Condos Toronto team directly:

• Phone: 416-885-0172

• Email: frank@vipcondostoronto.net

• Web: www.VIPCondosToronto.net

Frank Merigliano, Team Leader / Sales Representative, VIP Condos Toronto, RE/MAX PREMIER INTERNATIONAL INC., Brokerage — licensed since 1993, with RE/MAX since 1995, and a Top 50 RE/MAX team in Canada since 2015.

Sources: Limited Partnerships Act, R.S.O. 1990, c. L.16 (Ontario e-Laws); CMHC, MLI Select; Ontario Securities Commission, National Instrument 45-106 Prospectus Exemptions. Structural and financial particulars are drawn from a limited partnership structure prepared for a Toronto multiplex project by one of our vetted development partners.