Questions Investors Ask Before Funding a Deal in 2026
Originally published on August 14, 2026
Why Sponsors Need to Answer These 5 Questions Before They Ask for Capital
The questions investors ask before funding a deal have changed. Private real estate fundraising is down about 38% from last year, sitting at its lowest point since 2017, and sponsors leading with a big projected return alone are finding that it no longer works.
In a recent episode of Your CPA’s Take on Real Estate, hosts Daniel Roccanti and Kyle Paxton broke down what investors are really looking for in 2026, and what sponsors need to have ready before they even start a conversation.
A High Return Gets You in the Door, Not a Signed Check
Roccanti put it directly: a high return maybe just gets an investor through the door, it’s definitely not going to close the deal. Paxton agreed, noting that investors have moved past presentation driven numbers and are now looking at where cash flow will come from, whether rent growth is supported by the market, and what a realistic exit looks like.
The 5 Questions Every Investor Is Asking
According to Roccanti, most investors are running through the same mental checklist before they commit.
- Do I understand why this deal should work?
Sponsors need a value creation plan that is specific and economically supported, not just a projected number. - Do I understand how it could fail?
Investors want to see that risks have been identified and that there is a plan to protect against them. - Do I trust the assumptions and the supporting information?
As Roccanti explained, numbers need to be consistent, sourced, and clearly defined. - Does this team have the ability and capacity to execute?
This goes beyond the sponsor’s own experience. Investors want to know the broader team can actually deliver on the plan. - Do I know how I will be treated after the capital is committed?
This is where transparency, reporting, and communication come in, both good and bad.
Transparency Still Wins, Even With a Bad Track Record
One point Paxton made stood out: sponsors who openly discuss past mistakes tend to build more trust than sponsors who present a spotless record. As he explained, if a sponsor has no lessons learned to share, that itself becomes a reason for investors to be skeptical.
Roccanti added that a strong track record will open the door, but it does not rescue a weak deal. The deal itself still has to hold up on its own merits, with realistic assumptions and a credible downside plan.
Capital Structure Deserves More Scrutiny
Paxton pointed out that investors often focus heavily on when distributions will start, but don’t dig deep enough into the capital structure behind them, including leverage, debt service coverage, and interest rate exposure. In a tighter lending environment, these details matter more than ever for both sponsors and LPs.
What This Means for Sponsors Raising Capital Right Now
If you’re preparing to raise funds in this market, the sponsors who succeed are the ones who can answer these five questions clearly and honestly before an investor even asks. That means realistic underwriting, a credible downside case, and a track record of following through, even when the news isn’t good.
Want to hear the full breakdown, including the specific red flags investors are watching for? Watch the full episode of Your CPA’s Take on Real Estate or subscribe to the newsletter here.
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