PassivePockets: The Passive Real Estate Investing Show

Sponsor Vetting 101: 5 Steps to Safer Real Estate Investments with Spencer Hilligoss

Jan 21, 2025

Investment expert Spencer Hilligoss from Madison Investing shares his expertise on sponsor vetting, emphasizing the importance of a robust network and personal referrals over ads. He introduces a five-part framework to evaluate a sponsor's track record, communication style, and values. Spencer explains why a sponsor’s personal balance sheet and past failures can be telling of their reliability. He also discusses the critical differences between investing for cash flow versus wealth building, offering practical questions to ask before committing funds.

39:09

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Episode guests

Spencer Hilligoss

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Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Building a strong network of reliable investor referrals is crucial for finding trustworthy real estate sponsors rather than relying on online sources.

Implementing a five-part framework that evaluates a sponsor's track record, communication, and values is essential for making informed investment decisions.

Deep dives

The Importance of Vetting Sponsors

Finding and vetting sponsors is a critical aspect of passive investing that can significantly influence investment success. A structured vetting approach typically begins with leveraging a network of other investors, which is often the most reliable source for new sponsor referrals. While online forums can provide valuable information, they should not be the primary method for finding sponsors, as personal referrals tend to carry more weight. Ultimately, cultivating and maintaining strong connections with other investors is essential for discovering trustworthy and competent sponsors.

Intro

3min

Evaluating Real Estate Sponsors

10min

Evaluating Real Estate Sponsors

12min

Understanding Preferred Returns

7min

Aligning Investment Goals with Strategies

5min

Investment expert Spencer Hilligoss of Madison Investing joins host Paul Shannon to discuss the essentials of vetting real estate sponsors. From building your network to identifying financial red flags, Spencer shares his five-part framework for evaluating a sponsor’s track record, team, communication style, and more. Discover why the sponsor’s personal balance sheet matters, how to tell if they truly care about tenant experience, and when it’s time to walk away- no matter how good the deal appears on paper. If you’re looking to elevate your due diligence process and make more informed investing decisions, this conversation is a must-listen.

Today’s Episode Takeaways:

- Why personal referrals often trump paid ads or internet searches

- Spencer’s five-part sponsor vetting framework (track record, approach, team, communication, values)

- “Failure response” and why sponsors who have faced adversity can be more reliable

- The crucial differences between investing for cash flow vs. wealth building

- Practical questions to ask every sponsor before wiring your funds

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Disclaimer: The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgement and consult with qualified advisors before investing. You should only risk capital you can afford to lose. Remember that past performance is not indicative of future results. This podcast may contain paid advertisements or other promotional materials for real estate investment advisers, investment funds, and investment opportunities, which should not be interpreted as a recommendation, endorsement or testimonial by PassivePockets, LLC or any of its affiliates. Viewers must conduct their own due diligence and consider their own financial situations before engaging with any of the advertised offerings, products or services. PassivePockets, LLC disclaims all liability for direct, indirect, consequential or other damages arising out of reliance on information and advertisements presented in this podcast.

jimpfeifer@biggerpockets.com

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