Limited partnerships hold some sort of record. Never have so many invested so much and received so little. In the past 10 years, investors have poured $128.8 billion into office buildings that don't rent, oil-income deals that don't yield and pay-phone businesses that are out of order.
Sales this year have been running 40 percent below last year's pace. Still, the industry expects to pick up $4.9 billion in 1990 from buyers who hope that their deals will work.
Some general partners are souls of honor. But all too many treat their partnerships as a honey pot. Until recently, upfront costs ran from 18 percent to 30 percent of your investment (pared down to 15 percent to 18 percent, now that the fish are no longer biting).
And that's only the beginning. Sponsors often buy a property and resell it to their partnership five minutes later -- marking up the price by several million dollars. They might give the partnership only a fraction of the building's rent. And they run up rich expense accounts.
So investors often can't win. Spencer Jefferies of Partnership Profiles in Dallas says that of 400 real estate deals he follows, about half are paying little or no income, including those that were sold as income investments.
If you're in a partnership, what should you do?
Try to find out if your partnership is making money. Right now, that's easier said than done. You might be getting an $80 payout for every $1,000 invested -- but that doesn't necessarily mean you're earning 8 percent. The money could be coming from reserves, from a one-time property sale or from a loan. Those kinds of payouts soon come to a halt.
Information on your partnership may be easier to come by now that Robert A. Stanger & Co., which tracks and analyzes partnerships, has set up a 900 telephone number, at a charge of $5 a minute. It allows you to learn such things as where the payout is coming from, how the partnership is doing and what your units are worth. Call 900-786-9600.
Consider selling. The best prices are offered by the general partner or the brokerage firm that sold you the units. Alternatively, 19 firms help sell ''used'' partnerships at steep discounts.
For a free list, send a self-addressed, stamped envelope to the Investment Partnership Association, Suite 500, 1100 Connecticut Ave. N.W., Washington, D.C. 20036. Call at least six of them because prices differ. Some units may not fetch bids at all. If you do sell, taxes may be due, even though you got less than you paid.
Quit being a patsy. Limited partners are as passive as sheep and as easily clipped. Often, they approve ''restructurings'' that benefit only their merciless general partners.
Many general partners are rolling up several deals -- some strong, some weak -- into new partnerships and listing them on a stock exchange. The stock price is estimated at, say, $10, which might be enough to make the limited partners whole.
Once exposed to the scrutiny of the open market, however, the stock often drops to as little as $4 or $2. The investors are sunk, but the general partner now owns the lion's share of an ongoing company, from which he'll extract a lifetime of fees.
When offered a roll-up, investors should probably vote no. They'll be better off if they sell their units or press the general partner to liquidate. But you'll probably be advised by your broker to go along with the deal. Brokers are paid by the partnership for every ''yes'' vote they deliver.
File a lawsuit or an arbitration claim. If the prospectus fraudulently oversold the deal or didn't disclose everything that the general partner knew, you have a shot at recovering money, says lawyer Herbert Beigel of Beigel & Sandler in Chicago.
Call the state bar association and ask for the names of lawyers who concentrate on securities litigation. Or ask your own lawyer to refer you to a specialist.
Avoid all this grief in the first place. Partnerships aren't suitable for conservative investors or for older people who will want cash back within a few years. Do yourselves a favor and don't buy.