My First Conversation with A Potential Sponsor/GP

Multi-Family and Apartment Investing
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My First Conversation with A Potential Sponsor/GP

https://jpc-tn.com
Jamie Parker
Real Estate Investor · Memphis, TN · Member since 2016 · 417 posts · 139 votes

Over the past 6 months, I started underwriting on-market deals. Why? 2 reason; experience in underwriting and a deal is a deal On market or Off. Other Learning markets and looking at real offerings, presented an opportunity to learn something about multifamily and increase my knowledge.

After presenting 2 offerings to the local Real Estate Investment networking group, 1 Potential Limited Partner (LP) reached out to me to ask the real questions.

  • Who will manage the Asset?

  • Who will manage the Property

  • Who can we partner with that is Local to the area?

  • How do you plan to structure the deal JV/Syndication?

  • Deal Size?

  • What Are you Seeking, Equity/Debt, Sponsor?

  • Have you talked to a bank?

After all these questions, I was asked about the Business Plan for the Property. What is your goal for operating the asset? At the same time, I had a Seasoned Operator General Partner and Sponsor reached out to me on LinkedIn. I mentioned to him about the offering, and my desire to get into multifamily by bringing a deal. He mentioned that he is operating a much larger asset, 197 units, in the same region as the property I was looking at.

After some back and forth, he wanted to set up a call with me on the 19th this month. This brings my question. What are some questions would you present to a potential Sponsor/General Partner. My first thoughts will be considerate of what the potential LP asked and how can the gap be closed on those concerns. I would like to know what questions would you ask, what question should i consider.

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Divin KanyamaBusiness Member
Accountant · Seattle, WA · Member since 2025 · 403 posts · 162 votes
1d

You are approaching this the right way, @Jamie Parker . The potential LP’s questions are a good reminder that finding a deal is only the first step; investors also need confidence in the team, business plan, capital structure, and execution. The call with the experienced operator should be as much about fit and alignment as it is about getting answers.

Helpful questions might include: What similar assets have you operated in this market, and how have those deals performed relative to the original plan? Who would handle acquisitions, financing, asset management, investor reporting, and property management? What local relationships do you already have with lenders, brokers, contractors, and management companies? How much capital would each sponsor contribute, what guarantees would be required, and how would fees, control, voting rights, and promote be structured?

It is also worth asking what would make the sponsor reject this deal, which assumptions they would stress-test first, how they have handled underperforming properties, and whether they have experienced a capital call, refinance challenge, or investor dispute. Be clear about what you bring to the partnership and what role you hope to earn. A strong outcome from the call does not have to be an immediate partnership—it may be a clearer business plan, honest feedback on the offering, and a better understanding of the gaps to close before presenting it to investors. Any eventual structure should be documented and reviewed by the appropriate securities, legal, and tax professionals.

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  • Divin KanyamaBusiness Member
    Accountant · Seattle, WA · Member since 2025 · 403 posts · 162 votes
    1d

    You are approaching this the right way, @Jamie Parker . The potential LP’s questions are a good reminder that finding a deal is only the first step; investors also need confidence in the team, business plan, capital structure, and execution. The call with the experienced operator should be as much about fit and alignment as it is about getting answers.

    Helpful questions might include: What similar assets have you operated in this market, and how have those deals performed relative to the original plan? Who would handle acquisitions, financing, asset management, investor reporting, and property management? What local relationships do you already have with lenders, brokers, contractors, and management companies? How much capital would each sponsor contribute, what guarantees would be required, and how would fees, control, voting rights, and promote be structured?

    It is also worth asking what would make the sponsor reject this deal, which assumptions they would stress-test first, how they have handled underperforming properties, and whether they have experienced a capital call, refinance challenge, or investor dispute. Be clear about what you bring to the partnership and what role you hope to earn. A strong outcome from the call does not have to be an immediate partnership—it may be a clearer business plan, honest feedback on the offering, and a better understanding of the gaps to close before presenting it to investors. Any eventual structure should be documented and reviewed by the appropriate securities, legal, and tax professionals.

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  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 991 posts · 646 votes
    1d

    You have some good questions already. Since you're newer to multifamily, I'd spend a lot of time getting to know the sponsor and how they actually operate.

    I'd ask about their experience with similar properties, what happens when a deal doesn't go according to plan, who will manage the property day to day, and how they communicate with investors. I'd also want to understand exactly what each partner is responsible for and how the deal is structured.

    Don't be afraid to ask about deals that didn't go well. Sometimes you learn more from those than the successful ones.

    And make sure you understand the business plan well enough to explain it yourself. You want to be comfortable explaining how the property is expected to make money and what could go wrong.

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  • Percy N.
    Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
    21h

    @Jamie Parker what size deal are you looking at and what class of property is it?

    Based on that, I would look for a sponsor who is experienced in acquiring, managing (ideally both property and asset mgt) and has completed several exits.

    When working with other co-GPs, it is very important to identify the role that each will be playing and the related sponsor splits. We break that down to:

    • Acquisition/identification of the property

    • Pursuit capital (EMD, extensions, any capital at risk during due diligence, etc)

    • Key Principal (guarantors on a loan)

    • Capital raising

    • Ongoing asset management

    Typically, the last 2 get the lion's share but this can vary based on the project and the sponsors.

    It is important to view this as a business and as such also focus on not just the rosy picture, but what happens if the partnership goes not endure?

    Who makes the ultimate decisions?

    Who is accountable to investors?

    Are there sufficient reserves?

    Are you raising funds in a SEC compliant fashion?

    What is additional capital is needed post closing?

    ...

    ...

    You have a good start, now think of the long game as most multifamily projects last 5+ years.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    19h

    - What is the sponsor's experience, and what is the sponsor currently doing? Is this their full-time thing, or do they have a full-time job and manage this on the side?

    - What happens if something were to happen to the sponsor?

    - How much money does the sponsor have in the deal?

    - Has a background check been done on the sponsor to confirm there are no legal issues or lawsuits against them?

    - Is the sponsor familiar with this market, and how long have they been investing in that market?

    - Share with me sample investor reporting that you provide to investors?

    - How often do you report to investors?

    - Give me a time when you had to communicate bad news to an investor?

    Here are just some questions.

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