If you could verify exactly one thing about a sponsor before wiring, which one

Reporting samples, and I know that's the unfashionable pick. I want income without a second job, and the thing that would turn this into a second job is chasing a sponsor who goes silent for two quarters. If their standard report tells me occupancy, rent, debt service coverage and what they're worried about, I can live through bad news. If it's a paragraph and a photo of a clubhouse, no thanks.

Full-cycle against projections. Everything else is a proxy for whether they do what they said, and that one measures it directly.

Full-cycle against projections, with a condition. Ask for it deal by deal, not as a blended track record, because a blend hides the distribution. Six deals at 1.4x and one at 0.6x average out to something that looks fine on a website and tells you nothing about your downside. I want the worst deal named and explained, and I want the count of deals in the property type I'm being sold. That last part cost me real money, so I'm biased.

@cobalt on your reference point, you're right that they pick who you talk to, but the pick itself is information. Ask specifically for an LP from the deal that underperformed. A sponsor who's been through a bad one and handled it well usually has someone willing to say so.

Co-invest, but the number alone is a trap. $500k sounds like alignment until you find out it came out of the acquisition fee they charged the deal, which means the LPs funded their alignment. Ask whether the co-invest is fresh cash and whether it sits on the same terms as yours or in a class that gets paid differently.

@thicket that fee-funded thing is new to me and slightly ruins my afternoon. Is it common enough that I should assume it, or rare enough that asking is just diligence?

Coming at this from tenant screening, the parallel that helps me is that references are useless when the other party chooses them, so you build questions that only have one true answer. The rent roll is what it is. Prior year distributions against prior year projections are what they are. I'd spend the question on documents rather than people.

I've done six months of research and this thread has taught me more than the last three podcasts. Voting for full-cycle results, mostly because it's the only one I could actually evaluate without knowing the industry.

I'd take reporting samples over co-invest, and here's why the two aren't equal. Co-invest is a snapshot of one moment and it doesn't tell you how they behave when the plan slips. Reporting is a record of behavior over years, and a sponsor who wrote honestly about a bad quarter in 2022 has already shown you the thing you're actually trying to find out. @marlow got there first and I think that pick is undervalued in this room.

I'm brand new at all of this, and it hadn't occurred to me that you could ask for any of this.