When investing in real estate, things can get quite complicated as the types of deals you make progress and increase.
You have to ensure that you are doing everything by the law while keeping your best interests and the interests of investors in mind.
So, down the lane, if you are getting involved in bigger real estate deals, it would be more complicated for you to manage them.
This is why there is often a sponsor involved in such deals that facilitates transactions, legal support, and financial support to all the parties involved.
Sponsors in real estate deals will provide their services as an expert in the field to others so they can perform their roles in the deal.
But what does a sponsor real estate deal do?
They are people who are also known as the syndicator of a deal. A syndicator could be a person, an individual, or even a company. As a sponsor, they work towards finding the best deal, bringing investors together, and helping them source funds for their investment.
Here are some job roles and responsibilities of a sponsor in a deal.
1. Acquisitions
The investors, realtors, and other parties come into the picture later, but the sponsor starts working on the deal way before.
Sometimes, the sponsors are called finders as they assemble the team of professionals required for the deal.
To seal the deal, they focus on legal contracts, which involve them putting up a nonrefundable sum of money towards the deal.
Their job is still ongoing when the parties come together to invest in the deal. Still, later on, they also have to be involved in doing the due diligence, budgeting, house visiting, inspections, and preparing pitches for investors.
2. Operations and construction management
The sponsor will assist the investor in managing and operating it. They will set up all the KPIs and be responsible for the communications among vendors and contractors to make the lives of investors much easier.
3. Raise money
One of the biggest challenges of investing in real estate is arranging the funds for the investment. The sponsor taps into their network and finds viable sources through which the investors can raise money collectively. As a sponsor, it is their responsibility to help them make the pitch, plan, and gather all the documents necessary to raise the money.
4. Investor relations
The sponsor for the real estate project is also responsible for ensuring that there is a good relationship and understanding among the partners. As a sponsor is the face of the subject, they must ensure this to reduce any friction that might arise in the deal.
They must promptly communicate the details of the projects and other updates with the investors.
Sometimes, the sponsor also hires other people to handle the administrative work. These people will ensure that all the paperwork and E-mails are sent to the investors timely to inform them of the changes and progress of the project.
So, these are some roles and responsibilities of a sponsor. The sponsor plays an important role in the deal and needs the right team to fulfill the role.
