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Private equity real estate offers investors access to opportunities that are often unavailable through public markets. But unlike buying a publicly traded security, investing in a private real estate offering requires evaluating not only the asset but also the people responsible for executing the business plan.
That is why due diligence matters.
Sophisticated investors understand that successful outcomes are often driven by underwriting discipline, operational execution, and manager alignment long before a property is ever acquired.
Before committing capital, consider asking these ten questions.
1. What Is Your Investment Strategy?
Every real estate firm has a strategy, but not every strategy is clearly defined.
Investors should understand:
- Target asset classes
- Geographic focus
- Risk profile
- Hold period expectations
- Value creation approach
A manager should be able to explain their strategy clearly and consistently.
2. How Do You Underwrite Risk?
Strong firms are usually comfortable discussing risk.
Ask:
- What assumptions drive underwriting?
- What happens if rent growth slows?
- How do you stress-test acquisitions?
- What could cause the investment to underperform?
Understanding downside scenarios can be just as important as understanding upside potential and often even more important. We focus on avoiding risk, and too often people focus on the potential gains while ignoring the potential pitfalls.
3. What Is Your Track Record?
Past performance does not guarantee future results, but investors should understand how a manager has performed historically.
Important questions include:
- How many deals have been completed?
- What has been realized versus projected?
- Have results been achieved across multiple market environments?
Whenever possible, review realized outcomes rather than marketing projections.
4. Do You Invest Alongside Investors?
Alignment matters.
Managers who invest their own capital alongside investors participate in the same risks and rewards.
While co-investment alone is not a guarantee of success, it often demonstrates conviction in both the strategy and the underlying opportunity. A major red flag when the people running the deal are only investing their fees as opposed to at Hanson Capital Group, where our principal is the single largest investor and contributor to almost every single deal.
5. How Do You Create Value?
Not all returns come from the same source.
Some firms rely heavily on market appreciation. Others focus on operational improvements, leasing execution, or repositioning opportunities.
Investors should understand exactly how the manager expects value to be created over the life of the investment. We focus a priority on those that we can control compared to those that rely on outside factors.
6. What Happens If the Business Plan Changes?
No investment performs exactly as projected.
Ask how the firm handles:
- Market slowdowns
- Tenant turnover
- Construction delays
- Financing challenges
The answer often reveals more about the manager than the original business plan.
7. How Much Leverage Do You Use?
Debt can amplify returns, but it can also amplify risk.
Understanding leverage levels, loan structures, and refinancing assumptions helps investors evaluate the resilience of an investment under different market conditions.
Conservative leverage often provides greater flexibility during periods of uncertainty.
8. How Do You Communicate With Investors?
Transparency should not be reserved for favorable outcomes.
Ask:
- How often are reports provided?
- What information is included?
- How are challenges communicated?
Consistent communication helps investors stay informed and build confidence over time.
9. What Operational Infrastructure Supports the Business?
Real estate investing extends far beyond acquisitions.
Investors should understand:
- Asset management capabilities
- Accounting and reporting processes
- Compliance procedures
- Internal operational resources
A strong platform can support better execution throughout the investment lifecycle. Ask about total headcount and department structures; strong operating sponsors will be excited to share the systems they have built to manage investments efficiently and effectively.
10. Why Should I Trust You With My Capital?
This question is intentionally direct.
The answer should go beyond projected returns.
Strong firms typically point to:
- Track record
- Alignment of interests
- Investment discipline
- Transparency
- Execution capability
Ultimately, investors are selecting a long-term partner, not simply purchasing a property.
Why These Questions Matter
Private real estate investing is built on relationships and trust.
The goal of due diligence is not to find a perfect manager. Every investment carries risk. The objective is to determine whether the manager has the experience, discipline, and alignment necessary to navigate those risks responsibly.
The quality of the operator often influences outcomes as much as the quality of the asset itself.
How Hanson Capital Thinks About Investor Accountability
At Hanson Capital, we believe investors should ask difficult questions.
In fact, we encourage it.
Our approach is built around disciplined underwriting, conservative leverage, transparency, principal co-investment, and active asset management. We believe investors deserve clear explanations regarding both opportunities and risks.
Trust is not earned through projections. It is earned through execution, communication, and alignment over time.
Frequently Asked Questions
What should I look for in a private real estate investment manager?
Investors should evaluate track record, underwriting discipline, transparency, alignment of interests, operational infrastructure, and communication practices.
Why is co-investment important?
Co-investment helps align the manager’s interests with those of investors by ensuring principals share in both risks and rewards.
Should I verify a firm’s track record?
Yes. Reviewing realized transactions and historical performance can provide valuable insight into how a manager executes business plans and manages risk.
Strategic Takeaway
The right questions often reveal more than the investment presentation itself.
Understanding how a private equity real estate firm thinks about risk, execution, communication, and alignment can help investors make more informed decisions and build stronger long-term investment partnerships.
Work With Hanson Capital
Hanson Capital specializes in private equity real estate investments focused on high-scarcity industrial assets, disciplined underwriting, and long-term value creation. The firm works with accredited and institutional investors seeking durable income, downside protection, and strategic growth – including 1031 exchange solutions and passive ownership structures.
If you’re interested in discussing how our approach could fit into your portfolio, schedule a call to connect with our team. We’d be happy to discuss our investment philosophy, underwriting process, and how we approach long-term investor alignment.
