How to Be Super Extra Prepared as a Deal Sponsor

Tim Milazzo
July 13, 2023

A Guide to Winning Lender and Investor Trust

As a real estate deal sponsor, your ability to pull off successful transactions boils down to one fundamental aspect: capital. Unless you’re filthy rich and satisfied to invest only your own dollars, that capital typically comes from other capital sources. Trust is the magic wand that convinces lenders and investors to place their faith (and dollars) in you. It can make the difference between endless deal opportunities and constantly hitting walls.

One surefire way to miss the opportunity to foster and protect the trust of your capital is to not be prepared when there is an opportunity. Much of that preparation will be deal-specific, like underwriting the property and researching the local market, but the other part of preparation is purely personal. Your track record as a deal sponsor is going to be evaluated along with the deal itself, and for that, you will want to be prepared ahead of time.

I want to share some useful insights on how you can be not just prepared, but 'super extra' prepared.

Being super extra prepared is about having all the relevant information about your track record as a real estate investor at your fingertips. It gives you the confidence to approach any pitch or negotiation, knowing that you have the necessary documents to back up your claims and demonstrate your competence.

Here is my recommended list of documents to have on hand to show you are prepared, ranging from most common to least common in regard to how many investors have these ready and on hand:

Schedule of Real Estate Owned (SREO)

This is a detailed list of all properties you own. It serves as a vital document that lenders in particular want to see. It displays your ownership history, the type of properties you have, their locations, market values, and mortgages if applicable.

If you’re not sure how to format it or what data points to include, we have a free Schedule of Real Estate Owned template.

Personal Financial Statement (PFS) 

A comprehensive overview of your personal financial status, including assets, liabilities, net worth, and liquidity. It illustrates your financial stability and reassures lenders and investors about your ability to handle monetary commitments.

The PFS is especially important for signing on recourse loans, and least important when signing a non-recourse loan for a property with stabilized income - but being extra prepared means always having it ready in a lender diligence folder, because it’s never entirely irrelevant.

Investor Bio

Your professional biography should depict your journey in the real estate industry, your achievements, and your skills. Think of it as an elevator pitch that tells your story to lenders and investors, underlining your credibility as a deal sponsor. This can be a PDF (like a resume), or can simply be a link to a bio page on your website.

List of Past Deals

Demonstrating your track record is paramount. A list of past deals showcases your real-world experience and your ability to close deals successfully. Include all pertinent details like deal size, property type, location, and the returns generated.

Case Studies of Past Deals

The ability to pull on a trove of compelling case studies is where we start to separate the herd between the typical deal sponsors and the top players. Unlike the list of past transactions above, a case study would dive deeper on a single past deal narrated in detail, with all the ups and downs, challenges faced, strategies used, and the final outcome. They help paint a clear picture of your problem-solving capabilities and your ability to make profitable decisions.

More often than not, sponsors go into narrative mode about an upcoming deal they are trying to close, but far less often can they articulate the specific outcomes of past deals in the same way. It’s a huge credibility booster when they can - and a trait held by all the top investors in the industry.

Investor and Lender References

References work as social proof of your credibility. They can come from past investors who have seen good returns on their investments or lenders who would happily work with you again given the opportunity. When your reputation precedes you, securing funding becomes much easier. References are common for job seekers and therefore the concept is familiar even if an investor or lender doesn’t ask for them specifically, but rare enough among deal sponsors that having a list of references ready will help you stand out from the crowd.

Remember, being prepared isn't just about having these documents. It's about understanding them thoroughly and being able to discuss them confidently. It's about showing lenders and investors that you're not just another deal sponsor, but a prepared and savvy investor who understands the nuances of your investment niche.

And finally, in the spirit of being super extra prepared, always keep these documents updated. The real estate market is dynamic, and having the most recent information on hand ensures you’re always ready for that next big opportunity.

Stay prepared, stay funded!

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