Thoughts On RealtyShares Closing Its Doors To New Investors

[Dgilpin]

Pleasantly surprised that IIRM didn't just roll over and take the offer.  Obviously FG expected them to accept a lowball if they are that willing to head back to the negotiating table immediately.

[magpie]

I was really happy to see this update! 

[babets]

I got few distributions last week things are getting back to normal, fg excluded of course but i feel irm is doing well

[cgblack]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all. 

[cfojim]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all.

I'm assuming this investment closed prior to 2018.  Check your 2017 K-1 and see how the cash yields were reported.  I have several preferred equity investments that report cash yields as interest income.  It is possible that your $1875 in cash yields should be reported as interest income and your capital account should be higher by that amount.

[cgblack]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all.

I'm assuming this investment closed prior to 2018.  Check your 2017 K-1 and see how the cash yields were reported.  I have several preferred equity investments that report cash yields as interest income.  It is possible that your $1875 in cash yields should be reported as interest income and your capital account should be higher by that amount.

No, this investment has not closed, and there was no K-1 produced for 2017 (even though there were cash yields).  I too feel that they should be interest income and that my capital account should be higher.  I've sent them an email inquiring about this, but I'm not holding my breath. 

[Hindsight2020]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all.

I'm assuming this investment closed prior to 2018.  Check your 2017 K-1 and see how the cash yields were reported.  I have several preferred equity investments that report cash yields as interest income.  It is possible that your $1875 in cash yields should be reported as interest income and your capital account should be higher by that amount.

No, this investment has not closed, and there was no K-1 produced for 2017 (even though there were cash yields).  I too feel that they should be interest income and that my capital account should be higher.  I've sent them an email inquiring about this, but I'm not holding my breath.

I received a 2017 K-1 for Sand and Sea and it showed ordinary business income that equaled distributions, with no change in the capital account.

[barnold24]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all.

I'm assuming this investment closed prior to 2018.  Check your 2017 K-1 and see how the cash yields were reported.  I have several preferred equity investments that report cash yields as interest income.  It is possible that your $1875 in cash yields should be reported as interest income and your capital account should be higher by that amount.

RS231 - in 2016 and 2017 the distributions were reported as interest income with nothing as operating income. For 2018, Assure switched it to operating income (line 1) and net long term capital gains. As least the amounts when all taken together match the total amount earned.

[cfojim]

RS 116 - one day after getting the note above saying the sponsor is not responsive and they will provide a K-1 estimate, I receive a note that the K-1 has been uploaded - looked at it and it is the actual K-1 - makes me wonder about their internal communication.

Some K-1 activity from yesterday:
RS190 - received version 5, which is the same as version 4.  This investment is the good performing preferred equity Class A Multifamily in Dallas Fort Worth, which is current on monthly payments and operationally seems to be running well.  Distributions were corrected in a previous version, but it is still missing investment income (historically reported as block 5 interest income), so the capital account ending balance is too low by the amount of the missing income. I've told them repeatedly that the investment income is missing, but so far they are ignoring me.
RS193 - estimated K-1 for the Marriott Courtyard Columbus, a poor performing equity investment that provided no 2018 distributions and which historically for me was the last K-1 RealtyShares sent each year.  No information is provided yet on this K-1, except for block L capital account beginning balance, which is wrong because the ending balance from 2017 was not carried forward correctly to the 2018 K-1 beginning balance.
RS176 - estimated  K-1 for poor performing preferred equity Stellar Homes Fund I, which is current on monthly payments but anticipated to return substantially less than the original investment.  Distributions and capital account beginning balance are correct, but the income is missing on this version 1.

Jesus on version 5, there is no way accountants should screw it up that bad and I wonder who at the accounting firm is reviewing them before they are issued.

On RS190, received email today saying version 6 will fix it.

[cfojim]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all.

I'm assuming this investment closed prior to 2018.  Check your 2017 K-1 and see how the cash yields were reported.  I have several preferred equity investments that report cash yields as interest income.  It is possible that your $1875 in cash yields should be reported as interest income and your capital account should be higher by that amount.

RS231 - in 2016 and 2017 the distributions were reported as interest income with nothing as operating income. For 2018, Assure switched it to operating income (line 1) and net long term capital gains. As least the amounts when all taken together match the total amount earned.

There may be a good reason for the reporting inconsistency, but probably not.  My RS190 K-1 reported interest income in 2016 and 2017 and I'm told they are fixing 2018 to report the interest income ...

[cfojim]

Received RS188 K-1 version 3.

It removed the erroneous capital loss, added in the distributions, and is now showing all of the 2018 cash yields as income.  Block L left me with a capital account balance of $1 instead of $0, but all in all this K-1 now looks to be "close enough for government work".

[DigitalNomad]

Someone else in New England High Yield Portfolio VII? Got this update today and it doesn't look promising

New England High Yield Portfolio VII 8/21/2019
08/21/2019
IRR Management Services, LLC (IRM) has now taken over the Asset Management and Fund Admin functions of this investment. Our goal is to provide timely and accurate updates on each asset.

Since the last update, the sponsor's attorney has provided IRM with a detailed certified financial statement, as requested, regarding the principal, Michael Massimino, and the related real estate entities. IRM agreed to a Confidentiality Stipulation in order to obtain the financial statement and will not make the Financial Statements public. After the document review, IRM believes the Sponsor has a substantial number of outstanding monetary judgements against it. The Sponsor's net worth is estimated to be negative, and it's lawyers have suggested a possible bankruptcy filing and indicated they are also not being paid. As previously noted,  it appears the first mortgage holder on the majority of homes has been supplying funds to the sponsor, possibly funding the necessary cash to complete the construction and/or rehab of the properties. IRM believes the management fees from this activity are the only source of income for the sponsor. IRM estimates the sponsor's financial situation is dire and therefore now estimates that the prospects for any recovery in this investment is low.

The Sponsor's lawyers are challenging IRM's request to provide financial disclosure on Michael Massimino's brother and business partner, Mario Massimino. IRM had engaged a local counsel and argued that the failure to provide Mario's financial disclosure was an oversight because the claims against Mario are more tenuous.  IRM is still seeking a copy of the brother's financials. The trial process moves ahead slowly. The judge has scheduled a conference call for September 9th, 2019 to review status and set a scheduling order. Arguments on pending motions is scheduled for October 15th, 2019. There are a number of phases the case will go through starting with the Scheduling order, Discovery and Depositions,  and possibly an appeal. The process could continue on for another year or more.  IRM will continue to act in the best interests of our investors and will seek to obtain the highest return possible for investors.

Please continue to monitor the Investor Dashboard for updates and be sure to keep your bank account information up-to-date in order for our Fund Administrators to process any payments accurately and avoid any delays or missed payments.

[Sundevils89]

Reading all this is infuriating...The negligence and outright criminal behavior by many of these principals in these deals put together by RS is unbelievable. Really makes you wonder about crowd funded real estate as opposed to investing on your own. Apologies for the rant but I suppose watching half of my RS deals go south has something to do with it.....

[barnold24]

Received RS188 K-1 version 3.

It removed the erroneous capital loss, added in the distributions, and is now showing all of the 2018 cash yields as income.  Block L left me with a capital account balance of $1 instead of $0, but all in all this K-1 now looks to be "close enough for government work".

Are they showing it as a final k-1?

[barnold24]

Reading all this is infuriating...The negligence and outright criminal behavior by many of these principals in these deals put together by RS is unbelievable. Really makes you wonder about crowd funded real estate as opposed to investing on your own. Apologies for the rant but I suppose watching half of my RS deals go south has something to do with it.....

100% agree! I have narrowed my investing down to a few sponsors who I deal directly without going through the aggregation websites. Just waiting on my deals on those websites to wind down.

[cgblack]

Received my K-1 for 1 Sand and Sea.  They stopped paying cash yields last year, and are over a year behind schedule.  In 2018, I received 10 monthly cash yields of $187.50.  On my K-1 this is reported as $1875 of withdrawals and distributions, reducing my capital account from $25,000 to $23,966 (there was also a $159 loss)??  I'm not a CPA, but this does not seem correct at all.

I'm assuming this investment closed prior to 2018.  Check your 2017 K-1 and see how the cash yields were reported.  I have several preferred equity investments that report cash yields as interest income.  It is possible that your $1875 in cash yields should be reported as interest income and your capital account should be higher by that amount.

No, this investment has not closed, and there was no K-1 produced for 2017 (even though there were cash yields).  I too feel that they should be interest income and that my capital account should be higher.  I've sent them an email inquiring about this, but I'm not holding my breath.

We'll they finally answered my email and pointed me at my 2017 K-1 (predefined filter for 2018 only, DOH!)  The 2017 shows business income and distributions with no change to the capital account.  No answer in the email concerning the discrepancy from one year to the next.  It is not marked as Final though.

[cfojim]

Received RS188 K-1 version 3.

It removed the erroneous capital loss, added in the distributions, and is now showing all of the 2018 cash yields as income.  Block L left me with a capital account balance of $1 instead of $0, but all in all this K-1 now looks to be "close enough for government work".

Are they showing it as a final k-1?

I have no way of knowing.  They may change it again.

[schin98@juno.com]

I am new to posting here but have followed the conversation. The reason I'm posting is I had my accountant, who has 50 years of experience, look at the Realtyshares situation. HIs comment: "There is no way real estate investments could go bankrupt in this market...unless there is theft on a grand scale or a ponzi scheme....

I just don't understand how after 9 months, perhaps because some returns are still coming in, offices haven't been invaded by the FBI or the SEC, or this hasn't made it on a major news station.

How long did it take before Madoff's scheme was exposed? What are we looking at for a timeline?

[barnold24]

Received RS188 K-1 version 3.

It removed the erroneous capital loss, added in the distributions, and is now showing all of the 2018 cash yields as income.  Block L left me with a capital account balance of $1 instead of $0, but all in all this K-1 now looks to be "close enough for government work".

Are they showing it as a final k-1?

I have no way of knowing.  They may change it again.

RS 231 they marked as a final K-1 at the top of it but another investment that closed out in 2018, shows a capital balance and wasn't marked final K-1 at the top.

[babets]

I am new to posting here but have followed the conversation. The reason I'm posting is I had my accountant, who has 50 years of experience, look at the Realtyshares situation. HIs comment: "There is no way real estate investments could go bankrupt in this market...unless there is theft on a grand scale or a ponzi scheme....

I just don't understand how after 9 months, perhaps because some returns are still coming in, offices haven't been invaded by the FBI or the SEC, or this hasn't made it on a major news station.

How long did it take before Madoff's scheme was exposed? What are we looking at for a timeline?

Lol can we please stop being so dramatic and mention FBI and stuff? You guys are funny