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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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John_PVF

Has anyone heard anything about the sale process?  It's been 4.5 months and nothing. 

Given the various issues with payment clawbacks, calculation errors, delays, continued lack of communication, etc. I struggle to see a sale happening at this point.  Who would want to buy this thing anymore?  The back end processes appear to be completely manual, which means the asset management fee stream likely isn't able to cover the staffing needed and they're just burning what little cash they have left. 

With no value to be realized from a bunch of pissed off investors, and no profit from an fee stream, it's only a matter of time before the whole thing just implodes.  I hope they'll at least have the courtesy of informing us. 

dwengca

Quote from: John_PVF on March 26, 2019, 08:19:08 AM
Has anyone heard anything about the sale process?  It's been 4.5 months and nothing. 

Given the various issues with payment clawbacks, calculation errors, delays, continued lack of communication, etc. I struggle to see a sale happening at this point.  Who would want to buy this thing anymore?  The back end processes appear to be completely manual, which means the asset management fee stream likely isn't able to cover the staffing needed and they're just burning what little cash they have left. 

With no value to be realized from a bunch of pissed off investors, and no profit from an fee stream, it's only a matter of time before the whole thing just implodes.  I hope they'll at least have the courtesy of informing us.



This is my opinion only, but I really think RS is in some serious trouble for cash, and they might even be using some of our "investors" money to keep their day to day operation running.  I think if this continues, eventually all of our investment $$$ will be gone and we won't get our principles back.   One data point I have is that one of my investment has been listed as Paid off since 2/28 on the website and in their communication as well.  However, it has been nearly a month, I still have not receive my payout.  What problem/issues are justifying them not paying the principles back after nearly a month?

This is the last update I received from them yesterday.  Still no ETA and no real answers.  Could they be using some of these returned principles to keep their operations running?


Thank you for your email. Our team is currently working on crediting the payoff amount for this deal. At this moment we do not have an ETA for when this action will be completed. Please rest assured that we are doing everything in our power in getting this taken care of for all our investors. We appreciate your patience and understanding.

Regards,

John_PVF

Quote from: John on March 26, 2019, 09:35:55 AM
I've actually seen progress. Communication is still sorely lacking, and I have 3 non-performing investments that are incredibly frustrating, but over the last 10-14 days I have received a lot of catch-up payments and become current on 6 of my 7 others.

I am unfortunately in the opposite position.  No updates or payments in quite a while.  Even my deals that pay monthly in consistent amounts are MIA.

slarue

Does anybody have any info on Sumter, SC multifamily portfolio - RSL 2017A184?

Nothing from RS.. Last distribution early January (for November dividend) and nothing since that time. 

slarue

Also, has anyone received a schedule K-1 yet for Sumter, SC?

ramesh

Here is one data point to offer some reassurance about RS' distributions (noting that there is some worry here that RS is financing its operations on our distributions).  After some messy stuff — miscalculated amounts and ACH cancellation — RS finally deposited principal and interest for the Villas de la Luz deal.


John_PVF

Quote from: John_PVF on March 26, 2019, 11:55:14 AM
Quote from: John on March 26, 2019, 09:35:55 AM
I've actually seen progress. Communication is still sorely lacking, and I have 3 non-performing investments that are incredibly frustrating, but over the last 10-14 days I have received a lot of catch-up payments and become current on 6 of my 7 others.

I am unfortunately in the opposite position.  No updates or payments in quite a while.  Even my deals that pay monthly in consistent amounts are MIA.

I guess I just needed to vent a little.   :) Received 3 distributions this morning at my bank, although not reflected on the dashboard yet. 

slarue

Perhaps same for me - just received (94%) of principal back from Sumter SC multifamily - no update on RS website and no communication, but very happy to recover bulk of original investment...

mspringer

Like others, I received a similar response on my FG of Church's Chicken in Orlando (Apopka, FL).  I like the idea of calling a local business to see if I can get more on the ground info.  It was my understanding that this was near construction and had a recent sale fall through.  So I'm hoping, I guess, that it can still be saved and sold vs pieced out for parts.

Orlando MSA Church's Chicken Tranche 2 3/20/2019
03/20/2019
The borrower has informed us that the completion of the property has been delayed because the borrower has insufficient funds to complete construction. The borrower informs us that he has been attempting to raise additional equity to enable the completion of the construction. We are also in discussions with the borrower who is interested in bringing in other investors to buy the loan. We will be conducting independent research to determine the current value of the property. We will update you after this research is completed and if we receive relevant information from the borrower.

Lionking

Anyone has investment in 13187 Chalon Road?  For past few months they have been talking about potential sale.  The sale price has been cut where it could start eating into second lien debt

Chicago81

With respect to Church's Chicken - Winston Salem, I had been calling the neighboring businesses for over a year, including recently, and they have seen no sign of any construction or planned project on the lot.  I continue to be concerned that the borrower commingled funds for this project with other projects (which could potentially resemble a Ponzi sceheme, i.e., using new "project" funds to pay old project investors).  I am also concerned that the borrower has dissipated the funds.

One might accuse me of overreacting, but the circumstances here are alarming: (1) no internet presence for the borrower; (2) borrower default during the interest reserve period; and (3) simultaneous default on several of borrower's projects.  Moreover, RS has refused to provide information or even respond to my many (polite) emails; not even a boilerplate response.  I have considered potential legal claims against RS and even claims against the borrower (notwithstanding the supposed wall, there may still be direct claims in the case of fraud).  But at this point, the course of conduct by the borrower and RS is so shocking that it seems a criminal referral may be appropriate.  I agree with others that a rush to sue/threaten/demand could just distract RS and hurt us more.  But could anyone blame us, given the foregoing conduct by RS and FG (as described by RS)?

As I said before, I am really glad to have found this forum, and I appreciate the input from everyone else.

TryinToMakeIt

General update on my situation: as I noted earlier in this thread, I recently discovered that a group of returns and distributions that RS purports to have made to me back in 2016 never actually made it into my account. I notified RS and gave them 30 days to respond with a resolution, which should be an adequate amount of time. They acknowledged receipt, said the were looking into it... and that was all. No more communication despite 2-3 subsequent attempts by me to get an update.

I've now handed the matter off to an attorney who is looking into the company's situation and preparing a demand letter. Meanwhile, of the two investments that I still have outstanding with RS, one just posted an update, notifying me the once again there would be no distributions due to underperformance; the other has been silent in over a year and has me worried.

I know that others here have attempted to reach out directly to sponsors - has that produced any results?

Beat_The_Fraud

#432
Quote from: Chicago81 on March 27, 2019, 11:26:07 AM
With respect to Church's Chicken - Winston Salem, I had been calling the neighboring businesses for over a year, including recently, and they have seen no sign of any construction or planned project on the lot.  I continue to be concerned that the borrower commingled funds for this project with other projects (which could potentially resemble a Ponzi sceheme, i.e., using new "project" funds to pay old project investors).  I am also concerned that the borrower has dissipated the funds.

One might accuse me of overreacting, but the circumstances here are alarming: (1) no internet presence for the borrower; (2) borrower default during the interest reserve period; and (3) simultaneous default on several of borrower's projects.  Moreover, RS has refused to provide information or even respond to my many (polite) emails; not even a boilerplate response.  I have considered potential legal claims against RS and even claims against the borrower (notwithstanding the supposed wall, there may still be direct claims in the case of fraud).  But at this point, the course of conduct by the borrower and RS is so shocking that it seems a criminal referral may be appropriate.  I agree with others that a rush to sue/threaten/demand could just distract RS and hurt us more.  But could anyone blame us, given the foregoing conduct by RS and FG (as described by RS)?

As I said before, I am really glad to have found this forum, and I appreciate the input from everyone else.

Hi Chicago81,

I have gathered all the information through my sources, regarding Franchise Growth..Name of partners, DOBs, residential addresses in MD and NY, names and all PII details of family members of partners, number of companies they have opened to conduct fraud (shocking results found)and much more information which I am not going to disclose in public. I have been waiting for RS to complete the proceedings and once we have an affirmation that money is not going to be returned, then I will take the appropriate actions which could be devastating for FG. I am willing to fully co-operate with you in proceeding against RS and FG at any legal platforms. You can send me a personal IM and let's continue to hope this is resolved without any drama

dominickalbano@comcast.ne

I just saw two payments deposited in my checking account from RealtyShares (JWB SFR Fund) This fund has paid on time up until Jan. 2019 I am now caught up on this investment (Not reflected on the site). I still have two other investments that I have to check another checking account to see if they were also caught up. I will report back as soon as I know.  THIS IS GOOD NEWS!!!!

Derek

I haven't seen any updates here for 3081 Carrigan Canyon Drive Tranche 4 in awhile. This certainly appears to be a case of criminal activity, as someone has to have walked away with a bag of cash. The sponsor stopped paying and walked away long ago (11/2017), and the property has only suffered even more through RS's negligence and misconduct since. What started with a stated value of 1.9MM *before* the renovation, with $500K now 'spent' on refurb (or, more likely, stuffed into a duffel bag), is now looking at fire sale offers of 1.2-1.3MM. This is for a property that was originally listed for sale at 2.9MM. Poor vetting of the sponsor doesn't even begin to scratch the surface of RS's misconduct on this deal.

As far as my other deals, I'm having a very hard time tracking payments because not only is the site no longer current/accurate/in sync, but the payments I do get are being randomly distributed to the various accounts that I've had linked over the years. I have only one account defined for all of my deals, which is what the distributions were going to before RS closed it's doors, but ever since it's been a CF and I have no idea where distributions are going. I've thought about removing all but the one account I want to be used, but given RS's current level of competence I'm thinking it's best to at least receive the payments I am getting and track them down on my end rather than screw around with linked accounts and risk having to coordinate with RS about payments I don't receive as a result. How does any of us even know if we 'missed' a payment?..

What a mess

dwengca

Quote from: Derek on March 28, 2019, 08:22:40 AM
I haven't seen any updates here for 3081 Carrigan Canyon Drive Tranche 4 in awhile. This certainly appears to be a case of criminal activity, as someone has to have walked away with a bag of cash. The sponsor stopped paying and walked away long ago (11/2017), and the property has only suffered even more through RS's negligence and misconduct since. What started with a stated value of 1.9MM *before* the renovation, with $500K now 'spent' on refurb (or, more likely, stuffed into a duffel bag), is now looking at fire sale offers of 1.2-1.3MM. This is for a property that was originally listed for sale at 2.9MM. Poor vetting of the sponsor doesn't even begin to scratch the surface of RS's misconduct on this deal.

As far as my other deals, I'm having a very hard time tracking payments because not only is the site no longer current/accurate/in sync, but the payments I do get are being randomly distributed to the various accounts that I've had linked over the years. I have only one account defined for all of my deals, which is what the distributions were going to before RS closed it's doors, but ever since it's been a CF and I have no idea where distributions are going. I've thought about removing all but the one account I want to be used, but given RS's current level of competence I'm thinking it's best to at least receive the payments I am getting and track them down on my end rather than screw around with linked accounts and risk having to coordinate with RS about payments I don't receive as a result. How does any of us even know if we 'missed' a payment?..

What a mess

Agree with everything you said.  I'm in 3081 Carrigan Canyon Drive deal myself.  I personally believe whoever had "vetted" this deal and many others probably should have gone to jail. 


kt1984

Let's wait for RS to get back to us on the Taylor MI property- they mentioned for closing to happen sometime this week, so I am hoping we can get an update by tomorrow! I also noticed that the American Family Care Property was taken off the market- I am hoping its because it has been sold and am expecting an update from RS on that one as well. Let's hope that FG sorts out this mess and gives us our principal back- lets try and find out on the rest of the deals- how much Reserve is still with RS.

mspringer

with regards to reserve left, here is the response I received from RS yesterday on the Church's Chicken in Orlando.  Keep in mind, the last two updates on this property were that in January it was nearing construction completion and then last week that construction costs were going over and there is a "delay due to borrower's insufficient funds..."

I appreciate RS returning my email within 2 days, but it really should be pretty easy to find out how much money has been distributed and thus how much is still in reserve.

+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Thank you for your email. Unfortunately, at this time, the latest update posted on your dashboard is all the information we can provide. We understand that this is frustrating, and we will continue to provide updates as we receive them. Please continue to check your dashboard for additional information.

I have also pinged our Assset Managment team to ask if they can provide more details as to how much is still in reserve on our end.

We apologize for the delay and appreciate your patience

groovydude

Quote from: CushLash on March 21, 2019, 10:14:30 AM
All-

I am growing increasing frustrated by the lack of communication from Realty Shares - I basically received an email from them today regarding one of my investments (RS 277- Lynnview Apartments) stating the sponsor is current with their payments but they are delayed in making distributions because they are transitioning to a third party Fund Administrator.  This concerns me even more in that I can understand a 30 day delay or so with a transition as they want to get things right with flow of payments, but its now been over 90 DAYS since the last distribution was made -- I can't help but wonder if they are taking the payments from sponsors and using them to fund the operations of their business while they look for an exit/acquirer rather than distributing these funds to investors.  Just all feels very fishy.

In an effort to take some action, I reached out to Mark Roederick (https://crowdfundattny.com/about/) yesterday to discuss options. From my research, Mark seems to one of the preeminent legal minds focused on crowdfunding real estate.  The range of options we talked about were as simple as writing a demand letter all the way to filing a class action lawsuit.  His recommendation where we landed
after talking through the options was to engage his company to write a letter to Realty Shares demanding that they take action - part of his thinking was that given that he is well known in real estate crowdfunding circles, a letter coming from him may carry more weight than if one us individually drafted a demand letter on our own.

The only kicker was that he wanted $2,500 as a retainer for his efforts -- I'm not super hopeful that a letter from Mark will have an impact, but I'm also tired of sitting around on my hands doing nothing while Realty Shares turns it back on investors so would be willing to go this effort if there was a 5-10% chance this might help shake things loose.  Just thought I'd throw it out there to see if there were other investors who were interested in joining together to engage Mark?  I figure if we could round up ~20 people, we could each kick in $100 and fund the letter.  I hate to throw good money after bad, but $100 seems well worth it.

Any thoughts from others on the board?

Cush - Thanks for taking the initiative!!! Personally, I think we should hold off a little while longer before spending money, they seem to be making some headway. However, if we do go that route, I do think it might be reasonable to request that the company let us know what's going on with regards to the sale of the assets, I'd like to know if some other entity is holding all the marbles. On that note, it seems pretty clear to me that the window for a sale is closing fast. The longer they wait the less valuable these assets are, as more of the troubled sponsors start to show their colors.

Also, I think that we're all assuming that RS has the potential to rip us off, which they do, but I've been thinking about this from the other side. I'm guessing some sponsors want to nourish their reputations with the RS investor community and will continue to perform on their obligations. However, if I were a sponsor of one or two projects with RS and didn't care about pissing off a few dozen small investors, what's to keep me from withholding distributions? RS is in emergency mode, there's little chance they have the resources to come after me with legal action. Here again, if any sponsors are starting to do this, then it devalues the RS assets.

Overall we're in a big mess.

groovydude

I'm up to date on most of my investments. 3 months behind on 4039 95th Ave though (RS says they are aware of this), and now one month behind on 1026 Corsica Drive. Anyone here in on these?

I'd like to ask if there is anyone out there who might be able to perhaps make a google sheet, or some way that we could voluntarily start making a database of investors by asset. I think we have power in numbers, right now this board is all we have that I'm aware of and it's pretty scattered. Sam?