How We Approach Operator Due Diligence…and Baseball
Updated September 2026
Operator due diligence is the process of vetting the sponsor who will run a real estate investment: their track record, character, background, debt strategy, and how they behave when things go wrong. For passive investors, it often matters more than the property itself, because the operator makes the day-to-day decisions that determine whether a deal succeeds. Here is how we approach it at Wellings Capital, and what baseball taught me about it.
Do you enjoy major league baseball? Have you thought about the great lengths someone else must go to...in order to allow you to enjoy this sport from the comfort of your recliner?
MLB recruiters work hard so we can watch from our couch or box seats, and the team owners can enjoy a nice profit.
The coaches and recruiters for MLB teams go to great lengths to locate and woo the very best players. They scrutinize a player’s record, their performance under pressure, their physical strength and capabilities, their fit with the team, and more.
They review qualities like personality, character, and mental tools. Intangible qualities like coachability, mental toughness, intelligence, perseverance, aggressiveness, instinct, work ethic and more are all taken into consideration.
Sometimes a player can check almost every box but still not make the cut. A friend of mine, Bruce, spent his entire life preparing to play professional baseball. He told me he trained for about six hours a day from the time he was about six through his twenties.
After leading his University of Georgia Bulldogs to the national championship, Bruce was drafted by the Boston Red Sox organization. After rising quickly through the ranks from A to AA to the AAA team, Bruce was on the verge of a call up to the major leagues.
One night, Bruce disagreed with his manager’s decision on something and lost his temper. Bad. This turned into a 30-minute screaming match.
Bruce, on the verge of graduation to the Majors...was quickly demoted down within the Minors. His career ended quickly. And he had to watch every other starter on his team go to the Majors with the lifestyle and millions accompanying. Bruce went back to grad school, and his baseball career was over.
Lots of boxes checked. One box (coachability) unchecked. Bruce failed the due diligence test.
This sounds awfully similar to what we do here at Wellings Capital. When we launched Wellings Capital, our goal was to vet the very best operators and provide our investors diversification across...
Asset types
Operators
Geographies
Individual assets
Business strategies, and
Time
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Get your FREE Due Diligence Checklist for Passive Real Estate Investors Today!
Why Does Operator Due Diligence Matter?
But the key to all of this is operator due diligence. And we drill in deeply on every prospective operator. Because the human factors, track record, and inner-workings of the operator are far more important than any individual deal to us and our investors (the best operators usually have the best deals, and we do look closely at the deals).
What Disqualifies an Operator?
Less than stellar moral compass?
Not a fit.
Debt structure too risky?
Not a fit.
Don’t pass the criminal, financial, and other background and reference checks?
Not a fit.
Not in the same business since before the Great Financial Crisis of 2008?
Not a fit.
Lacking acquisition strategy targeting mom-and-pop operators with significant upside?
Not a fit.
We take the time to carefully get to know every candidate. We know things about some that their own staff and family don’t know. For example, on one evaluation we had a court runner visit a local courthouse in California to pull felony records from 20 years earlier for a key executive.
Because many of these tangible and intangible factors will make the difference between a good investment and a great one.
And when times get tough, it could mean the difference between preservation of principal...and the loss of it.
We are very active in this process...so you can be passive. If you want to learn more about our operator due diligence process, you can schedule a call with us here.
We love what we do. And the more we learn about the due diligence process, the more we are aware of how little most investors really know about the operators and the projects they invest their hard-earned capital in. Whether you invest with us or anyone else, be sure you don’t skip this important process. The free Due Diligence Checklist above is a good place to start
Frequently Asked Questions
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Operator due diligence is the process of evaluating the sponsor or operating partner who will manage a real estate investment. It typically covers their track record, what they personally did on prior deals, background and reference checks, financial strength, how much of their own money they invest, their debt strategy, and how they communicate with investors.
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Deal due diligence evaluates the property: the market, purchase price, physical condition, financials, debt, and business plan. Operator due diligence evaluates the people who will execute that plan. Both matter, but a strong property can still fail with a weak operator, which is why many experienced investors start with the operator.
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Ask what the operator personally did on the deals in their track record, how much of their own money is in this deal, who runs asset management and how they report, how they handled a deal that went wrong, and whether you can speak with past investors and partners. How an operator answers is often as telling as what they say.
DISCLAIMER: Past performance is not indicative of future results. There is no guarantee that any forecasts or projections will be achieved. Any investment involves significant risk, including the possible loss of principal. Investors should carefully consider the investment objectives, risks, charges, and expenses of any Wellings Capital Management, LLC (“Wellings”) investment program. Offering documents containing this and other important information are available by calling 800.844.2188, emailing invest@wellingscapital.com, or visiting wellingscapital.investnext.com.
The information in this article is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction where such an offer or solicitation would be unlawful. Wellings does not provide tax, legal, or accounting advice. Investors should consult their own advisors regarding any investment. Information and any opinions contained in this article have been obtained from sources that we consider reliable, but we do not represent that such information and opinions are accurate or complete and thus should not be relied upon as such.
