The whole deal. Not just the upside.
Four things to establish in any specific opportunity: where the money goes, what creates and returns the value, what changes if the plan misses, and who controls the decision.
Take this into an opportunity overview. Official offering documents control the answers.
Where does my money go?
No mystery bucket: every dollar needs a job. Official sources-and-uses and offering documents control the actual allocation.
Uses
- Acquisition or land
- Construction and improvements
- Closing and financing
- Operating reserves
- Contingency
Fees
- Every applicable fee, named and quantified
- Who receives it, and when
- Whether it is charged on the way in or out
- Sponsor capital alongside investor capital
What creates the value, and what returns it?
A return can come from more than one source. Ask which source carries the underwriting, and what must go right for it to happen.
Current income
- Property income as it operates today
- Whether distributions are contracted or projected
- What has to hold for income to continue
Created value
- Construction, leasing, or improvements
- Debt paydown
- A possible refinance or sale
- Which of these the plan actually depends on
What changes if the plan misses?
The cushion is the distance from the plan to break-even. Protections may reduce risk; they cannot remove it.
Move these, one at a time
- The opening date
- Construction cost
- Occupancy or leasing pace
- Interest rate
- Operating expenses
- Exit value
Then look for
- Contingency
- Reserves
- Debt terms and maturity
- Alternative paths if timing slips
- A downside case the team can explain plainly
Who gets paid, and who decides?
Economics do not tell you who controls the decision. Alignment is a structure to inspect, not a slogan.
Economics
- Sponsor capital in the deal
- Every applicable fee
- The promote or waterfall
- Guarantees
Control
- Material decision rights
- Conflicts
- What changes if more capital is required
- What changes if a different exit is required
Deal Truth is a review framework, not a prediction or investment recommendation. Illustrations and scenario language do not calculate or guarantee distributions, tax benefits, liquidity, refinancing, sale proceeds, or return of principal. Official offering documents, current opportunity materials, and qualified tax, legal, and financial advisers control. Private real estate involves risk, illiquidity, and possible loss of principal.