Real estate capital raising and syndication
What do LPs want to see in a sponsor's track record?
Short answer
LPs want a sponsor they can count on. That means consistency, reliability, a focused strategy, and a team that has actually completed deals. A long history helps, but it is not a hard rule. Audited financials are a plus and rare at smaller sizes. Many sponsors talk to a securities attorney about their materials before sharing them.
Most LPs are not checking a box for ten years of history. They are asking whether they will still want to work with you in five years. One investor on a recent webinar put it plainly. He said that when people ask what he looks for in a sponsor, his answer is consistency, reliability, and boring.
He also said the IRRs and projections matter less to him, because they are just projections. If the sponsor is right, the rest of the diligence gets easier. He told us he had written 25 to 30 page diligence reports on a single property. He wants to be sure of the sponsor before he does that work.
Years of history are not the real test
I hear this a lot from newer syndicators. Someone told them family offices want at least ten years of history, and they only have three. That is not true as a blanket statement. Family offices range from very small virtual setups to single family offices managing hundreds of millions. They do not all use one rule.
"I have never seen a fund with less than 100 million AUM that has audited financials."
Audited financials from a known firm do make you look more institutional. If you have them, good. But most smaller companies and funds do not, and they still raise capital from family offices all the time.
This clip answers the claim that you have no shot with family offices without ten years of history and audited financials.
Summary and key takeaways from this video
What a young team can show instead
If you are early, be honest about where you stand. I said on another webinar that a team of two or three people, with under seven years of history and under a dozen deals, is not at an industry standard level of development. So I would think carefully about whether industry standard fees fit your stage. Many sponsors in that position look for a fee level that gives them an advantage.
Focus also helps. The smaller you are, the more focused you need to be. It is more credible to say you buy one type of asset in one small area than to say you do a bit of everything. An institutional investor can read a scattered track record as unfocused.
Here I talk about fees and focus for smaller teams with a short track record.
Summary and key takeaways from this video
Borrowing a track record the right way
Another route is to bring in partners who already have the history. A developer in one of our webinars said investors are not going to hand someone $10 million with no track record. So he brought in a builder with decades of experience and a local developer with about 40 years in his market. He gave up more of the deal to do it. The point was to put a team together that had the track record.
He also showed his own numbers. He was at 12 deals, with five done as co-GP structures. Specific counts like that are easier for an LP to check than general claims.
This clip shows a sponsor building a team with a track record through co-GP partners.
What I would put in front of an LP
- A clear count of deals completed and what happened in each one
- One focused strategy in a defined market
- The names and past work of every key partner
- Financials in the best form you have, audited or not
- Honest notes on what went wrong and what you changed
Many sponsors talk to a securities attorney about how they present their track record to investors.
From the Family Office Club stage
One more thing I tell newer sponsors, because it surprises them. Some people think that if you build the track record first, the investors will come. That is not true, and it is a painful lesson. If you wait to raise capital until you have a long history, you will not have learned anything about what investors actually want. So start the conversations early and be honest about where you stand. Let the track record grow while you learn from those meetings.
"Some people think, especially in the fund management industry (and the hedge fund space needs to hear this all the time), that if you build the track record, the investors will come. That's not true either, because if you don't try raising capital until you have a long track record, you're not going to have learned anything yet."
"Thinking that if you build the track record, the investors will come. That's for sure not true, and it's a painful lesson."
Key facts
- One investor on the webinar said he writes diligence reports of 25 to 30 pages on a single property before investing.
- I have never seen a fund under $100 million of AUM with audited financials.
- A developer on the Co-GP webinar had completed 12 deals, and five of them used a co-GP structure.
Sources
From Richard C. Wilson's Centimillionaire Strategies YouTube channel: Family Office Club Hot Seat Webinar Featuring Live Strategy Sessions with Investors & Founders, Family Office Hot Seat: Real Capital Raising Advice for Founders & Investors | Monthly Webinar, Joint Venture & Co-GP Webinar - How to Close Deals with Peers & Partners in the Family Office Club, Capital Raising FAQ Webinar. Quotes come from the video captions, lightly edited for readability. Figures are the speakers' own estimates and experience.
General education only. Not legal, tax or investment advice.
Talk to a securities attorney to explore options around investor communications rules, track record presentation and co-GP structures. Do not use AI to write your own legal agreements.
Your next steps
- List every deal you have completed with dates, size, and outcome.
- Narrow your story to one asset type and one market.
- Add partners who bring a real track record, and write down their roles.
- Prepare the best financials you can, and note whether they are audited.
- Consider talking to a securities attorney about your materials before sharing them.
Follow-up questions
Do I need audited financials to raise from family offices?
No. In the webinar I said I have never seen a fund under $100 million of AUM with audited financials. They help you look more institutional, but most smaller managers raise without them.
Can I raise with a short track record?
Yes, but be realistic about it. Stay focused, price your fees to match where you are, and consider partners who already have the history.
Do LPs care about projected IRRs?
One investor told us projections matter less to him because they are only projections. He looks first at whether the sponsor is consistent and reliable.
Related questions
- How much of my own money should a sponsor co-invest?A sponsor should put in an amount that is meaningful to them, and there is no universal number.
- How do I raise money for my first apartment deal?Start with the deal, because a good one is far easier to fund than most first-time sponsors expect.
- What do 1031 exchange investors look for in a syndication?1031 exchange investors look for a deal they can understand quickly, a structure that fits their exchange deadlines, and a sponsor who clearly knows how exchanges work.
- How do I build an investor list for real estate deals?Start with people who already invest in deals like yours, then record what each one wants.
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