@Larry Krueger, as a previous poster mentioned, you would need to go through the same due diligence as if you were buying the property yourself. Was the purchase price too high? Are the rents reasonable for that location and asset? Do you agree with their rental vacancy forecasts, their rental increase forecast, their expenses per unit, etc.
On top of that, I wrote down a few items that I would also consider:
1. Has the sponsor owned the property and has the operating history to suggest that project revenue/costs/return is accurately projected?
2. How much has the sponsor co-invested in the deal - i.e. do they have skin in the game and how much?
3. How many deals has the sponsor done previously and what were the outcomes of those deals?
4. What is the track record of the sponsor of holding the asset to the planned duration (usually 7-10 years)?
I also agree that there are challenges with the DST market these days. Too many sponsors pursuing limited assets and causing price appreciation that returns are either low or overly optimistic IMHO. Good luck.
