(FORTUNE Magazine) – Even during periods of low inflation, real estate is not without charms: it can offer high current income and some nifty tax savings. Limited partnerships are a popular way for individuals to play this game, but one drawback is the high price of admission. Sales commissions and fees for such things as real estate brokerage and legal services can eat up to 30 cents of each dollar invested. Now it looks as if those hefty front-end fees may be coming down. In mid- December, T. Rowe Price, the nationally known sponsor of no-load mutual funds, began applying the no-load concept to real estate limited partnerships. The T. Rowe Price partnership, its first ever, will be marketed in much the same way as its no-load mutual funds, through direct mail and advertisements. The advantage is that investors can sign on directly, without getting their tickets punched by a commissioned sales broker. Cutting that corner can mean a lot. As shown in the table above, the average take at the gate for similar real estate partnerships sold this year is nearly 20% of the amount invested. That includes sales commissions, real estate brokerage commissions, and other expenses charged by the sponsor. The new partnership will be unleveraged--it will use no debt--and will seek to shelter up to 30% of its annual yield from taxes. It's impossible to predict how the properties will perform, but they'll be managed by experienced hands. A neophyte in the real estate market, T. Rowe Price has signed on Coldwell Banker, the country's largest broker/manager of real estate, to be the partnership's co-sponsor. Coldwell already manages more than $600 million of private partnership investments, and has done fairly well at it. In this new deal, T. Rowe Price will handle sales and service the accounts, while Coldwell Banker will help find properties and may manage some of them. The general partners will get something for their troubles, of course. Over the life of the partnership, T. Rowe Price and Coldwell plan to take 10% of the cash available for distribution to investors each year. Also, when the properties are sold and the partnership liquidated, the sponsors can get up to 18.4% of the sale proceeds after investors have achieved a minimum 10% return. That's a high take, says Andrew Stanhope, senior editor of the Stanger Register, a publication that analyzes limited partnership offerings. Still, he says, the terms of the T. Rowe Price partnership make it one of the most generous deals around. Whether this new offering prompts other real estate partnerships to go the no-load route remains to be seen. It's unlikely that a Merrill Lynch, for instance, will ever bypass its army of commissioned brokers. Still, says Stanhope, ''My gut feeling is that there'll be more coming.''

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