Evaluating Sponsors & Track Records

September 2025

When it comes to real estate syndications, one saying holds true:
You’re investing in the jockey, not just the horse.

The property may look great on paper, but the sponsor is the one responsible for executing the business plan, managing the asset, communicating with investors, and steering through challenges. Their competence, track record, and alignment with investors are often the single most important factors in determining success.

Why the Sponsor Matters

• Execution of the Business Plan: Even the best projections mean little if the sponsor can’t deliver on them. A sponsor’s ability to manage renovations, stabilize occupancy, and optimize operations determines whether a deal hits or misses its targets.

• Experience Across Market Cycles: A sponsor who has successfully navigated downturns (e.g., 2008 or 2020) shows resilience. Anyone can look good in a hot market, but how they perform under stress tells you far more.

• Transparency & Communication: The best sponsors over-communicate. They send clear updates, report both good and bad news, and are available to answer questions. Poor communicators upfront rarely improve later.

• Skin in the Game: Sponsors who co-invest significant personal capital in their deals have better alignment. It shows they’re not just earning fees — they’re putting their own wealth at risk alongside yours.

Evaluating a Track Record

When reviewing a sponsor, look beyond polished marketing decks. Consider:

• Number of Full-Cycle Deals: How many projects have they acquired, operated, and exited?

• Performance vs. Projections: Did returns actually match (or exceed) their initial underwriting?

• Asset Types & Market Familiarity: Have they worked with the same property type and market you’re evaluating?

• Team Strength: Who handles acquisitions, underwriting, asset management, construction, and investor relations? Is there depth and redundancy in their team?

Red Flags in Sponsors

• No Experience or No Full-Cycle Deals: A lack of track record means more risk. If they’re new, are they partnered with an experienced co-sponsor?

• Overly Glossy Presentations: If everything looks too good, ask for the raw numbers behind their claims.

• Excessive Fees Without Co-Investment: If the sponsor profits heavily regardless of deal performance, investor alignment may be weak.

• Vague or Defensive Communication: If they avoid answering tough questions, that’s a sign to step back.

LP Questions to Ask Sponsors

Here are some sponsor-focused questions you should always ask:

• How many full-cycle deals have you completed? What were the outcomes?

• Can you provide references from past investors?

• Tell me about a deal that underperformed — what went wrong, and how did you handle it?

• How much of your own capital are you investing in this deal?

• Who on your team is responsible for asset management and investor communications?

• What lessons have you learned from past challenges, and how do you apply them today?

Sponsors who welcome these questions and answer them openly are far more likely to be strong long-term partners.

Why This Matters

Strong sponsors with proven track records inspire confidence and protect your investment. Weak sponsors with flashy marketing but no history of execution can expose you to unnecessary risk. Leading with transparency is critical. When investing with a sponsor team, investors should know not only about the deals that went well, but also how the team has adapted and grown when things didn't go as planned. Real estate is a people business, and choosing the right sponsor is often the difference between peace of mind and sleepless nights.