Sponsor

The sponsor is the operator. It identifies the property, negotiates the price, arranges any financing, sets up the special purpose vehicle, raises the equity from investors and then manages the asset until it is sold. Investors put in most of the money. The sponsor puts in the work, and often a small slice of the money as well. On many fractional platforms the platform is the sponsor: Arrived buys and manages its own houses. On others the platform is a marketplace and independent sponsors list their deals through it. The listing should say which, because it changes who you are trusting.

Sponsors earn fees at each stage. An acquisition fee of 1 to 3% of the purchase price when the property is bought. An asset management fee of 0.5 to 2% of the value, or a share of rent, each year. A disposition fee when the property is sold. And in many deals a promote, which is a share of the profits above a hurdle return, typically 10 to 30% of the gains once investors have earned a preferred return. None of this is improper. It is how the work gets paid for. The question is whether the fees are proportionate and whether they align the sponsor with you. A sponsor paid mostly through a promote earns most when investors earn most. A sponsor paid mostly through acquisition fees earns most by buying often, whether or not the deals are good.

Track record in this property type and this market. A sponsor that has run twenty single-family rentals in Texas is a different bet from one buying its first hotel in Portugal. Skin in the game. A sponsor co-investing its own money alongside yours has a reason to care about the exit price, not just the fees. Reporting. Ask how often investors hear about occupancy, repairs and finances, and look at an existing property's updates before buying a new one. On Threeworld each listing names its platform, and the platform's page describes how it operates and what it charges. That is the starting point for judging the sponsor behind any property.