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Thoughts On RealtyShares Closing Its Doors To New Investors

Started by Sam, November 07, 2018, 11:29:29 AM

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mspringer

Nosferatu_FL

Yep, 
Some of the info I have is from someone from this board that was able to speak directly with Scott.  I just wish RS did their DD before sending out that last update, that seemed completely lacking in knowledge of the specifics of the deal vs what had been done to that point with the project.

Maybe we should get part of RS' mgmt fee?  But yes, I agree with you that at this point I just want my money back and will count the rest as cost of education.

Beat_The_Fraud

Just received the email below from IIRR Management Services

Announcing a Webinar with Franchise Growth, LLC

Dear RealtyShares Investor,

As you may know,  several deals in the Franchise Growth portfolio are not preforming according to the original plans, and IRM is expecting losses in these investments.

Since IRM assumed management of the RealtyShares portfolio just 3 weeks ago, we have reached out to the sponsor, held several discussions and took certain steps to ascertain the status of these investments. IRM is currently exploring any and all possibilities afforded to us based on the original investment agreements, and we expect to make decisions on this portfolio in the coming weeks.

We have arranged an hour long Webinar with Mr. Bruce Arinaga and Mr. For Li of Franchise Growth. LLC, they will present the deal chronology, their analysis of the situation, and their version of events. They have also agreed to answer selected questions from the audience.

IRM believes it is in the best interest of investors to communicate with the sponsors, understand the details and consider any offers. However, IRM reserves the right to consider all options available to investors, including but not limited to, legal actions, and will continue to manage the investment in order to achieve the best possible outcome for investors based on the information it has at the time.

Only active investors in the Franchise Growth portfolio are invited to participate in this Webinar. Please forward any questions you might have for the sponsors or asset managers to contact+fg@realtyshares.com to be vetted and considered for the discussion.


Dialing information attached below. A recording of this event will be made available shortly after it concludes.

Franchise Growth Webinar
Tue, Jul 9, 2019 4:00 PM - 5:30 PM EDT (1:00 PM - 2:30 PM PST)

Please join the meeting from your computer, tablet or smartphone.

dwengca

For me, things have not improve at all since the new management took over.  In fact, a few of my regularly monthly payouts have not pay any distributions in June.  Such as

Philadelphia Multifamily Fund VII
New Jersey Multifamily Fund II

At this point, things are looking worse and worse  to me.

ramesh

I received only one distribution in June out of six expected.  On several deals I am still awaiting first quarter updates.  A return of principal announced 4 weeks ago is yet to hit my bank account.

I hope others are seeing distribution and status update activity in their portfolios. I have noticed in the past that RS activity ebbs and flows among various deals as they focus on some things to the exclusion of others.  I am hopeful I will hear back on my deals soon.

I too feel things haven't improved with IRM taking over: the same old delays in processing payments, boiler plate responses, and no meaningful replies to queries.  Based on what I see so far I don't intend to invest a dime with these folks.

John_PVF

Just received an email from the new manager (IRM) indicating that that K-1 postings would extend into July now.  I checked on the dashboard and 2 that they previously posted have been reissued with drastically different numbers.  Glad I didn't file any of my returns yet, now I'm thinking I should wait until right up to the deadline in case any other edits come through.  No communication via email or dashboard notification that there were changes, so would have filed inaccurate returns if I hadn't checked.  Suggest everyone checks their tax documents as well.

Distributions have slowed to a crawl (last one was June 12), which I hope is due to them focusing 100% on getting K-1 issues sorted out.  Still just one more data point that we aren't out of the woods yet on this whole thing.

Hindsight2020

I think the payment situation under IRM is largely the same, although I am seeing a little confusion/lag as they get acclimated. I received 4 of 6 expected distributions in June, and 1 of the non-payers is a RREAF sole deal. IRM sent a notice that the sponsor was withholding distributions. I read the attached actual sponsor update--the sponsor is indeed withholding distributions--but on the common equity. We have the PREFERRED equity. I emailed IRM and RREAF together and RREAF immediately responded that they made the June preferred payment in early June. IRM then issued a correction that RREAF made the preferred payment and it would soon be distributed. It hasn't yet. Clearly, internal confusion left that money just sitting around for a month.

The major changes I see on the asset management side:
1) Sponsor interaction seems to be much more active
2) IRM didn't create these messes, so they have no problem abruptly telling us when we are screwed

JD

Quote from: Hindsight2020 on July 03, 2019, 06:29:55 AM
The major changes I see on the asset management side:
1) Sponsor interaction seems to be much more active
2) IRM didn't create these messes, so they have no problem abruptly telling us when we are screwed

Agreed.

I also received fewer distributions in June than I should have. However, I did receive several at the beginning of last week so they are still paying out and recently.

However, I still don't even have 1 tax document posted.

At least IRM is doing something and has sent out more communications than we were receiving; I'm sure they are overloaded with this stuff.

Nonetheless, I haven't heard back from Eric Sullivan either regarding the Communications Drive e-mail I sent him on Friday. We'll see if I do...

Looking forward to the FG webinar; wonder what kind of "explanation" they will have.

barnold24

Quote from: John_PVF on July 03, 2019, 06:24:43 AM
Just received an email from the new manager (IRM) indicating that that K-1 postings would extend into July now.  I checked on the dashboard and 2 that they previously posted have been reissued with drastically different numbers.  Glad I didn't file any of my returns yet, now I'm thinking I should wait until right up to the deadline in case any other edits come through.  No communication via email or dashboard notification that there were changes, so would have filed inaccurate returns if I hadn't checked.  Suggest everyone checks their tax documents as well.

Distributions have slowed to a crawl (last one was June 12), which I hope is due to them focusing 100% on getting K-1 issues sorted out.  Still just one more data point that we aren't out of the woods yet on this whole thing.

In that same email saying that they were delaying the K-1's, it said that they would do their best to come up with them even if they don't have the information from the Sponsor so I can only wonder how accurate they will be. At this point through, I will take anything so I can just file my return and get my refund. So glad I stopped doing deals with them in early 2017 and am down to two 2015 deals remaining!

ft2008

I have a quick question. These losses that some of us are seeing in investments with RS, can they be written off on our taxes against other capital gains etc??

stingray

@ft2008--I really would recommend that you speak with an accountant.

Generally, when a US taxpayer:

sells a security (or it becomes worthless) or
writes off a bad debt

he/she realizes a capital loss.

How that capital loss interacts with your capital gains and ordinary income depends on other factors.

In special cases, you can affirmatively abandon a partnership interest and, under Section 165(a), claim your loss against ordinary income.

If there is a situation where you'd like to do that, you would definitely want to speak with an accountant about it.

Disclosure:  I am not an accountant.

aksg

Hello

Has anyone invested in

2301 Collins Avenue, Miami Beach, FL

This was debt deal on a condo. It has been in foreclosure since early 2018 and I have hit a brick wall in getting any meaningful updates from RS.

Granted FL is a judicial state and sometimes the foreclosure processes take their own time, but lack of communication from RS is extremely disappointing and fishy.

ft2008

@stingray  Thanks for your guidance on that matter. Greatly appreciated..

1UnknownSubject

Was on the FG call. The main person said that Coastal Florida Church's Chicken, Melbourne, FL, should be completed in August. However, I am not sure what that means for anyone invested in that specific deal. Anyone else hear what it would mean if it is completed? Probably still a near 100% loss at this point.

Not super impressed with FG....they missed something.

jpabello

I also listened to the FG webinar, and it is clear that American Development Partners (ADP) and Manny Butera stole the funds they received through the RealtyShares platform, and they are refusing to return them. 

I want to report this to the FBI White Collar Crime division. Is anyone interested in joining me?

https://www.fbi.gov/investigate/white-collar-crime

The FBI's white-collar crime work integrates the analysis of intelligence with its investigations of criminal activities such as public corruption, money laundering, corporate fraud, securities and commodities fraud, mortgage fraud, financial institution fraud, bank fraud and embezzlement, fraud against the government, election law violations, mass marketing fraud, and health care fraud.

mspringer

Quote from: 1UnknownSubject on July 09, 2019, 02:04:30 PM
Was on the FG call. The main person said that Coastal Florida Church's Chicken, Melbourne, FL, should be completed in August. However, I am not sure what that means for anyone invested in that specific deal. Anyone else hear what it would mean if it is completed? Probably still a near 100% loss at this point.

Not super impressed with FG....they missed something.

I'm in Apopka, FL (Orlando) Church's, which he lumped in with yours.  I took it to mean that by August it will be ready for GOALZ (I assume they are still onboard) to take over.  Maybe it's wishful thinking but I would think that would lead to a near full recovery of funds.  Perhaps minus the $350k still needed to finish and legal fees.  To this point we have only gotten 2% back and I'm at the point where anything close to 100% would be really good.

sdnerd

That was an interesting webinar. So the story as I understand it is:

1. FG claims ADP stole 7 million dollars. This money simply vanished, and nobody has gone after them. Poof it's gone.
2. FG has been "injecting capital" into some of the projects despite the ADP theft. No word on where this capital came from.
3. FG now wants to buy out all the loans at a discount. Hand-wavy on where this capital would come from.
4. None of this was disclosed to anyone until... today.

I try to give people the benefit of the doubt... but this certainly smells like they were either completely asleep at the wheel, in way over their heads, or... in on it. They certainly didn't give me the impression that ADP executed a masterful plan of stealing 7 million dollars... more that they just lied about doing things and ran off with it, and nobody verified.


Did I miss something there?



1UnknownSubject

Quote from: mspringer on July 09, 2019, 02:10:09 PM
Quote from: 1UnknownSubject on July 09, 2019, 02:04:30 PM
Was on the FG call. The main person said that Coastal Florida Church's Chicken, Melbourne, FL, should be completed in August. However, I am not sure what that means for anyone invested in that specific deal. Anyone else hear what it would mean if it is completed? Probably still a near 100% loss at this point.

Not super impressed with FG....they missed something.

I'm in Apopka, FL (Orlando) Church's, which he lumped in with yours.  I took it to mean that by August it will be ready for GOALZ (I assume they are still onboard) to take over.  Maybe it's wishful thinking but I would think that would lead to a near full recovery of funds.  Perhaps minus the $350k still needed to finish and legal fees.  To this point we have only gotten 2% back and I'm at the point where anything close to 100% would be really good.

Thank you for catching that. I was not aware of GOALZ until now. Not holding my breath though...

rrw2013

Also, FG kept talking about finishing the projects but made no comment about how that would impact RS investor returns.  There are appraisals. FG should show us if they sell all assets and return to investors, what does that look like.  I assume that finishing some that are close may help, but for most probably not.

How does one give money to 27 properties before verifying that they are doing nothing?

barnold24

Quote from: rrw2013 on July 09, 2019, 02:22:12 PM
Also, FG kept talking about finishing the projects but made no comment about how that would impact RS investor returns.  There are appraisals. FG should show us if they sell all assets and return to investors, what does that look like.  I assume that finishing some that are close may help, but for most probably not.

How does one give money to 27 properties before verifying that they are doing nothing?


Have a lot of FIRE people promote your website like Realtyshares giving out referral fees  to those websites and do no due diligence...poof money appears

barnold24

Quote from: ft2008 on July 07, 2019, 04:13:02 AM
I have a quick question. These losses that some of us are seeing in investments with RS, can they be written off on our taxes against other capital gains etc??

Speaking as Accountant, yes most of them can be offset and whatever losses you can't use during the current year assuming we see are our K-1's at some point can be carried forward to offset future losses you may have.