10 reasons why deal flow rules the world

Welcome back and happy Thursday!

In honor of the first few deals getting passed through my newly created GP-LP Match platform (learn more/register here) this week, I’d like to spend a little time on the value of deal flow for an LP.

There are MANY reasons to NOT want deal flow as an LP (e.g. being busy), so what I will do below is try to address each of those 10 hesitations individually.

At the end of the day, nobody will tell you whether you should be an LP or not.. and as I say plenty of times, it’s definitely not for everyone. However, if you do decide to dip your toes into the space I highly recommend considering these arguments and doing it right.

Announcements (article continued below):

• **February LP Cohort: **Review 4 deals with me and a small group of other LPs to learn what to look out for in deals. Please reply to this email if it’s of interest.

• **GP-LP Match is live and deals are going out daily that match your criteria for free! **If you’re an LP or GP join here in under a minute. I’m behind on verification for LPs so please ping me privately to expedite once you sign up.

• **Last premium post: **10 Lessons from my NYC trip - get a lot of positive feedback on these annual posts, hope you’ll enjoy!

• Skeptical Statement: "I don’t have time to sift through a bunch of deals. I just want to be told where to wire the cash."

Response: I get it—life’s busy, and reviewing deals doesn’t sound as fun as, say, hitting the golf course (don’t ask me to hit the golf ball btw) or working (just me?). But here’s the thing: wiring cash blindly is like buying a car without checking if it has an engine. Reviewing multiple deals ensures you know what you’re getting into—and helps you avoid costly regrets. It makes sense to use experts to help you, but there’s nothing quite like understanding something on your own and owning your success (or learning from failure!).

• Skeptical Statement: "Too many deals will just confuse me. I want clarity, not complexity."

Response:

Imagine going to an ice cream shop and seeing 31 flavors. Yes, it’s a lot, but after a few samples, you figure out which one you like best (and which one tastes suspiciously like cough syrup). Deal flow is the same—you don’t need to try everything, just enough to know what’s good and what to avoid.

In the context of GP-LP Match, the flavors are the filters that you can refine over time. Don’t like getting multifamily deals? Click a button and you won’t see them again. Don’t want to get a deal without a significant coinvest? One button away. Unlike the ice cream shop, it doesn’t cost money to try the different flavors, since the deal flow simply comes to your inbox for free.

• Skeptical Statement: "I don’t need deal flow; I just need a good GP to trust."

Response: Trust is great, but even great GPs aren’t perfect (they’re human and some investments don’t work despite a GP’s best efforts). Seeing other deals lets you double-check their work and familiarizes you with other ways of thinking about investments.

• Skeptical Statement: "I’m not an expert. That’s why I want someone else to do the work."

Response: You don’t need to be an expert—just a little informed. If you start with my blog in terms of learning the basics, I wouldn’t be offended! :) Deal flow is like looking at Yelp reviews: you don’t have to be a chef to know a restaurant with one star and "mystery meat tacos" might not be the best choice. Learning how to set filters and screening deals quicker is the best thing you can do for your LP journey.

• Skeptical Statement: "Why would I care about deal flow when I’m only going to invest in one or two deals?"

Response: Fair point—but think about dating. You don’t marry the first person who smiles at you (I hope). Looking at more options helps you find the right fit (particularly true if this is your first investment). Even if you’re only investing in one deal, seeing a variety ensures it’s "the one" and not just "good enough" … it might also encourage you to diversify some of your holdings across several asset classes and different GPs.

• Skeptical Statement: "It sounds like a lot of work to review all these deals."

Response: It can be—and like I always say, if you don’t have time to understand what you’re investing in, I don’t think LP investing is for you right now. Knowledge is power and the best way to grab a lot of knowledge about asset classes, markets, underwriting techniques (etc) is see a lot of stuff and spend time understanding it.

• Skeptical Statement: "The GP I trust always brings me great deals. Why look at others?"

Response: That’s awesome—you’ve got a rockstar GP! But even rockstars can miss a note now and then (we’ve all heard a bad live performance). Checking out other deals helps you make sure their offers are still the best for you (and diversify!!!).

• Skeptical Statement: "I don’t see the point of looking at bad deals if I’m not going to invest in them."

Response: You will only look at bad deals if you don’t set your filters well. Set up your filters, and you’ll get deals that match your criteria.. that simple! I would also argue that there are some interesting lessons in comparing good vs bad investment opportunities in the beginning.

• Skeptical Statement: "I’m not interested in building relationships with GPs, just in finding good deals."

Response: Totally fair—but here’s the secret: deal flow is how you find good deals and build connections. The more you evaluate, the more GPs know you’re serious. And those relationships? At the end of the day this is a marketplace, and a GP doesn’t need to take your cash (many cases of GPs being selective btw - and rightfully so).

• Skeptical Statement: "I’ve made good returns before without looking at tons of deals. Why change now?"

Response: Congratulations on your past wins! But markets change—just ask anyone who bought tech stocks in 1999, floating rate deals with cap rate compression assumptions circa 2021 (😔). Deal flow helps you stay on top of trends and ensures you’re not relying on luck. If you’re invested in a particular market, it’s also helpful to see trades in that market that other GPs are raising money for (and their underwriting assumptions).

Thank you so much for reading, I hope this was helpful and look forward to your feedback as always.

I advise LPs on existing and potential positions and write articles here weekly on what I see in the marketplace that could help you invest better. You can find me on LinkedIn or Twitter.

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