Red Flags in a Real Estate Sponsor and How to Spot Them w/ Brian Burke
Real estate sponsor decisions can make or break your entire investment. A good sponsor can navigate a bad situation. A bad sponsor can blow up a perfectly good deal.
This episode is co-hosted by Ben Gray, partner and CEO at RSN Property Group. We’re joined by Brian Burke, founder and CEO of Praxis Capital and author of “The Hands-Off Investor”.
With more than 30 years of experience, Brian has operated through multiple market cycles and acquired over a billion dollars in real estate. He’s seen the run-ups, the corrections, and exactly what happens when deals are built on shaky foundations.
In this conversation, he shares what actually matters when evaluating a real estate sponsor in today’s environment.
We break down the key things you need to look for when evaluating a sponsor and how to avoid the costly mistakes that many investors make. We talk about the right questions to ask, the sponsor’s track record you should focus on, and why a sponsor’s debt strategy and capital stack can shape the entire outcome of a deal.
If you’re investing passively or thinking about it, this episode will give you a checklist to confidently vet a real estate sponsor and protect your capital.
Let’s dive in!
Interested in becoming an Investor with Reed? Click here to join his Investor email list.
Key Takeaways:
- 00:00 Intro
- 01:56 Chase sponsors, not deals
- 03:40 Market trends and making sense of demographics
- 08:02 How to properly vet a sponsor
- 09:51 The harsh truth about ROI
- 12:07 Sponsor due diligence and red flags
- 14:04 Three crucial questions to ask a sponsor
- 15:30 Fees, waterfalls, and underwriting
- 28:44 Debt and maturity dates
- 31:20 Advice for aspiring investors
- 32:24 Outro
Additional resources:
➡️ Check out Brian Burke:
- Instagram: https://www.instagram.com/investorbrianburke/
- Website: https://praxcap.com/
➡️ Visit https://reedgoossens.com/ and:
- Invest passively in multifamily real estate
- Get FREE access to my 100% Passive Real Estate Investment Masterclass
- Take a look at my portfolio
- Get FREE multifamily real estate resources
➡️ Follow me on social media:
- LinkedIn: https://www.linkedin.com/in/reed-goossens-b2a6a933/
- Instagram: https://www.instagram.com/reedgoossens/
- Facebook: https://www.facebook.com/reed.goossens/
➡️ Subscribe to my podcast:
- YouTube: @ReedGoossensREI
- Apple: https://apple.co/44MiDN7
- Spotify: https://spoti.fi/45fVIcR
- Stitcher: https://bit.ly/3OHHJqJ
- Soundcloud: https://soundcloud.com/investing-in-the-us
—
Investing in the U.S. is a podcast for real estate investors and entrepreneurs who want to break into the U.S. market and grow their wealth!
Subscribe/Follow so you never miss an episode!
