Let’s get one thing straight: failure means that the passive investors don’t receive their preferred returns and/or initial equity investment at the sale of the property. However, if the sponsor underwrote conservatively and purchased the property with the idea to renovate and improve it, then the deal shouldn’t fail. Syndication should never be a matter of entering a deal and keeping your fingers crossed it succeeds. It requires a thoughtful and balanced approach combined with research and experience to execute a deal and achieve satisfying returns. We acquire property based on several proven factors that have worked for us in the past as well as due diligence. One primary factor for us is an occupancy greater than 90% (which can be verified with the T12 statement). We also clarify the course of action if the returns dip below projections so there aren’t any surprises. Be sure to ask these questions of your prospective sponsor, as well as inquiring about any questions you may have about the deal, team, and market. A forthright and experienced sponsor should never balk at your questions and instead take you and your concerns seriously.