The UN (2008) reports that more than one third of the growing urban population in developing countries is living in slum conditions. Lizarralde and Root (2008) show that urban low-cost housing policies in developing countries are often inefficient and could even lead to further market distortions. Their case studies in South Africa prove that the informal construction sector, the only sector that is able to meet the needs of low-cost housing, is often prevented from being involved. To realize greater participation of the informal construction sector and thus better meet the needs in low-cost housing, public-private partnerships (PPPs) are often mentioned in literature as a more promising way than present methods (Ha (2001), Browning (2000)). However, there is a gap in literature in how to realize these partnerships. Literature describes several types of partnerships but it is unclear on what grounds a certain type should be chosen. This article will describe how to select the right type of partnership. For the realization of sufficient housing for the urban poor, Otiso (2003) also indicates that partnerships can help. Using a case study of an ongoing slum upgrading project in Nairobi, Kenya, he argues that new approaches are required to meet the needs of housing and service of settlements in Third World countries. He considers tri-sector partnerships (involving the state, voluntary and private sectors) as a solution to these problems. The selection of proper partners is crucial in such partnerships (Kumaraswamy and Anvuur (2008), Zhang (2005c)) and the success of these projects are highly depending on it. To be able to deliver successful low-cost housing projects, knowledge is needed about how to select the right type of partnership and how to select suitable partners.