Paying a syndication sponsor's (high) travel costs

[Andrey Y.]

This is something I frequently see when reviewing opportunities:

Travel and inspection costs / Asset due diligence                         $200K $300K etc.

Now, if the entity is purchasing 1 or 2 assets, how much does travel, hotels, etc. cost? There is nothing to stop the syndication sponsor from traveling first class, staying at the Plaza 5* hotels, and eating lobster and champagne every meal. If there is a huge cushion in the budget, why not? I don't blame them. Its human nature. I probably would too.

When I think about it, I want my GP in a sense to get great accommodations and be as comfortable as possible. I'm a doctor and I definitely don't travel first class most of the time. This makes me think I am in the wrong business! There is so much lee way for a sponsor to do whatever they want, human nature will come into play. There is no one auditing their actions. And the budget is very generous for these things.

A high number isn't a big deal if the LLC is raising $50MM. If its a $10M property, I'm not so sure. That said, I am considering to change careers ;)