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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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kt1984

Thanks for the update John- I agree Taylor MI should be a cleaner process ideally. At this point do we have any other option than to just sit tight and watch how it plays out. Can we take this up with Realtyshares? I also have 2 other investments with Franchise Growth- American Family Care which has good reviews online and is still on sale - but could meet a similar fate like the Decatur IL property (fingers crossed). Also the Captain D in Shelbyville KY which is yet to open. At this point, I will be Happy with a 75% Principal Payout on all my Franchise Growth Investments.
Just curious- if there is a Principal loss, what kind of tax statement can we expect from Realtyshares- will it be similar to 1099B, so that at least we can claim the losses on our taxes.

Also, all my Realtyshares investments are debt and I still have not received a 1099 INT- was in the process of doing taxes- has anyone else received it?

svytraveler

I received my 1099-INT from "RS Lending Inc." last week.

stingray

With tax time approaching, please remember that if you had any loans liquidated at a loss to you, you may entitled to realize a capital loss.  For loans (not LLC partnership interests), I am concerned that RealtyShares is not reporting these losses to investors.  You can still claim the loss provided you have it documented.  Just don't forget!

daletucker50

Just got this notice:
Utah SFR Fund IV 2/20/2019
02/20/2019
As of February 15th, we have not received payment from the sponsor. This delay was caused by a change in our payment process. We are working with the sponsor to promptly mitigate this issue. The sponsor indicated that they are wiring the preferred interest payments to RealtyShares in the next 24 hours. If we fail to receive the payment by February 22, we intend to use the full remedies outlined by our partnership agreement. Additionally, we are working with the sponsor on a workout solution to pay back the note and will provide an update as soon as we come to a resolution.

RealtyShares is committed to manage and service your investments, for questions please contact us at contact@realtyshares.com. Please note that due to confidentiality, any questions sent directly to the sponsor will be forwarded to the same mailbox.

magpie

Looks like the changed the language of the most recent updates!  They back-dated it too, although it was the original...all payments delayed now to 15-30 days.

Please note that we are making changes to our internal process which is causing us unusual delays in processing your payment. We apologize for any inconvenience that this may cause. We anticipate processing your distribution within the next 15-30 days or earlier

MSH

Quote from: stingray on February 12, 2019, 04:43:43 AM
Just a heads up: RealtyShares' contractors accidentally reported some interest payments as Nonemployee Compensation on Form 1099-MISC, rather than interest on Form 1099-INT.  Why does this matter?  Because you could be assessed 15.3% self-employment tax because of the mistake.  I am not sure how widespread the problem is.  RealtyShares states that they are correcting it.  Their email is copied below.  Check your records and make sure you use the corrected forms, when you receive them.  And document everything in case you are audited.

***
Dear Investor,

During an audit of the 1099 Tax documents that were sent on January 31st, it came to our attention that the incorrect form was used to report interest for your Pref Equity investment(s) with Realty Shares. You may have received a form 1099-MISC with an amount listed in box 7, for "Nonemployee compensation".

We are correcting this error and:
- You will receive a corrected Form 1099 MISC, showing a zero amount in Box 7. 
- You will also receive the correct Form 1099 INT showing the interest income.

Both of these forms will be mailed this week.  The interest amount shown on the Form 1099 INT will be identical to the amount listed in box 7 on the erroneously issued Form 1099 MISC.

We apologize for any inconvenience,

For anyone impacted by the 1099 MISC form issue I reached out to RS this AM, because I have still not received the replacement 1099 INT form. They actually replied very quickly with the email below. Looks like end of next week now on the replacement 1099 INT to be sent out....


Thank you for your email. The corrected 1099 forms are going to be mailed out to investors at the end of next week. We appreciate your patience.

In addition, all policies and contractual commitments remain unchanged. From this point forward, we are kindly directing all traffic to contact@realtyshares.com for any further questions or concerns.

Regards,


Emma Lagos  | Customer Success Team  | RealtyShares

daletucker50

Utah fund is Bluemountain. They haven't started paying back principal. Was to have started in November I believe.

dmk395

I've received nothing from a senior debt deal at 210 Aerie Court, Atlanta, GA.  The deal was supposed to be exited 6/30/18.  Sponsor asked for a 6 month extension which would have been 12/30/18.  Still nothing.  There is a physical piece of property there, not sure why no information has been put out there or why foreclosure hasn't started.
Anyone else invested with this one?

ramesh

I received two (out of an expected eight) bank deposits from "RS Servicing LLC" yesterday, but no entries on the website dashboard.  I can only guess the deal they were distributed from.  What a mess!

mspringer

Like the last few posts, I also received one of my monthly payments yesterday (21-Feb) and without notification on the RealtyShares site.  Of course I would rather have the money and a delayed website update, I don't see why these can't both happen.  I guess we keep waiting and hoping for a satisfying resolution.

John_PVF

I also had a few deposits hit my account yesterday but no updates on the website.  No way to identify what deals they were from, let alone if the amounts were correct.  One of them was for less than $10. 

Has anyone heard any updates on the sale process?  A number of folks thought we'd have some clarity by now. 

Taxman

Quote from: John_PVF on February 23, 2019, 12:23:17 PM
I also had a few deposits hit my account yesterday but no updates on the website.  No way to identify what deals they were from, let alone if the amounts were correct.  One of them was for less than $10. 

Has anyone heard any updates on the sale process?  A number of folks thought we'd have some clarity by now.


I think this issue of a portfolio sale has the potential to place RealtyShares somewhat at odds with the platform investor population, as the company's board will attempt to maximize the value to satisfy the VC's and others that invested directly in RS, which at a minimum will likely lengthen the amount of time required to strike a deal, assuming there remains a deal to be struck.  In turn, the longer it takes to work through a viable deal, the more likely it becomes that platform investors realize "hope" is not a strategy and actions including litigation and/or independent probes initiated through state or federal authorities may be undertaken, especially given the crappy way RS has handled this from a PR perspective.  This of course could render RS toxic and submarine any potential deals.  If there is a deal to be made, RS needs to also consider the longer term value to the platform investor as well, in terms of asset management and other functions critical to platform investors.  I have a substantial amount of money invested through the platform myself and it has been very hard to sit back and try to let things play out given the lack of communication, ongoing payment interface issues, delinquent or nonexistent reporting and payouts, concern that sponsors may take advantage of the situation the longer it persists, etc.  I can only imagine the carnage of tax season and the K-1 process.  Whoever is left in senior management at RS should well realize that it is now nearly four months since their announced demise and they need to get this situation handled ASAP for everyone's sake and not try to squeeze every penny out of any potential deals.  This isn't a fine wine and it's not going to get better with time.  A little communication along the way wouldn't hurt either.

samalamadingdong

Thanks for the posts on seeing some interest payments hitting your bank accounts. Gives me some hope. But no such luck yet for 141-153 Main St., Los Gatos, CA property. Last interest payment was 12/14. I wrote to the sponsor sridharequities.com but not gotten a reply. RS replied to me earlier but obliquely. They said their Senior Debt Manager went and visited the site and reported there were permit delays. But they didn't answer the question about when payments would start again - and they didn't reply to a follow-up where I tried to pin them down on that aspect.

John_PVF

Quote from: Taxman on February 23, 2019, 01:40:40 PM
Quote from: John_PVF on February 23, 2019, 12:23:17 PM
I also had a few deposits hit my account yesterday but no updates on the website.  No way to identify what deals they were from, let alone if the amounts were correct.  One of them was for less than $10. 

Has anyone heard any updates on the sale process?  A number of folks thought we'd have some clarity by now.


I think this issue of a portfolio sale has the potential to place RealtyShares somewhat at odds with the platform investor population, as the company's board will attempt to maximize the value to satisfy the VC's and others that invested directly in RS, which at a minimum will likely lengthen the amount of time required to strike a deal, assuming there remains a deal to be struck.  In turn, the longer it takes to work through a viable deal, the more likely it becomes that platform investors realize "hope" is not a strategy and actions including litigation and/or independent probes initiated through state or federal authorities may be undertaken, especially given the crappy way RS has handled this from a PR perspective.  This of course could render RS toxic and submarine any potential deals.  If there is a deal to be made, RS needs to also consider the longer term value to the platform investor as well, in terms of asset management and other functions critical to platform investors.  I have a substantial amount of money invested through the platform myself and it has been very hard to sit back and try to let things play out given the lack of communication, ongoing payment interface issues, delinquent or nonexistent reporting and payouts, concern that sponsors may take advantage of the situation the longer it persists, etc.  I can only imagine the carnage of tax season and the K-1 process.  Whoever is left in senior management at RS should well realize that it is now nearly four months since their announced demise and they need to get this situation handled ASAP for everyone's sake and not try to squeeze every penny out of any potential deals.  This isn't a fine wine and it's not going to get better with time.  A little communication along the way wouldn't hurt either.

I don't disagree with you, but the thing I wonder if they realize is they are selling a depreciating asset!  Every day that goes by it loses value simply because they're monetizing the future servicing rights.  And that's notwithstanding the potential value hit from bad PR, litigation risk, etc.

This whole thing is starting to seem like a big Catch-22 now that it's in run-off.  Investors and RS incentives aren't aligned.  The longer the current situation exists, the more likely the really bad outcomes become reality.  I keep hoping for a deal to get announced, but if there was one to be had you would think that 4 months would be long enough to pull it off.  At this point at least give us something about how you plan to run it absent a deal, because right now there doesn't appear to be one.

stingray

I have a deal where RS notified us that they received the payoff over a month ago, but they still haven't distributed principal to investors.  Anybody else in the same situation?  Two weeks I can understand.  Over a month is just wrong.

dwengca

I have not gotten a single dist from any of my deals in Jan yet.  Also, very little updates.  I fear that RS will soon shut its door completely and leave us (investors hanging).   Many of the deals that used to pay out regularly have all been (if not most) recently stopped paying for one reason after another.  I feel like many of those guys are taking advantage of the situation at RS.  If RS are not communicating with us, they are probably not communicating with the sponsors either...

CPAprenuer

I received $75 on 2/21 and $750 today on 2/26 - both from RS Servicing LLC.  I know what the $75 is for because it is a typical monthly payment from one of my investments, but have no idea what the $750 is for.  While I'm happy to get some money it is disappointing that the website is no longer being updated and we have no way of identifying payments.  Let us know if anyone gets an update on how this will be addressed going forward! 

ramesh

A month or so ago, several folks here (including me)  had posted about Cooper Street Capital's plan to sell the Villas de la Luz property, and return money to investors.  This information was received through an ex-RS sales person who has moved to Cooper Street.  Notably, the sale is taking place almost two years ahead of the originally proposed timeline.

Today I received a notification from RS that the property is under contract.  It is unclear how long the sale process will take and how long it will be before we see a return of funds, but every time I see a notification from them or a post here that someone received a distribution, it offers me a little reassurance that wheels continue to keep turning, however slowly, at RS.

Thanks to all here who have shared information.  Please continue to do so.

Followthesunand72

Madison At Black Mountain has now paid.  I had mistaken a deposit from another source in my previous post.
Quote
Quote from: Taxman on February 15, 2019, 11:41:44 AM
Quote from: Followthesunand72 on February 15, 2019, 09:19:39 AM
I had 2 equity deals that paid off in full since RS closed for new business.

Westheimer Oaks paid on time, full principal and earnings.

Madison at Black Mountain paid a year ahead of schedule, full principal and earnings.

Seems to me that there is too much focus on the "what ifs", rather than the positives.

Have you actually received the funds from Madison at Black Mountain?  I ask because I have a substantial investment in that property and although I have received notifications that the deal closed, I have yet to receive actual payoff for that investment, as well as periodic distributions from several other investments that have paid monthly distributions regularly when RS was fully operational.

ramesh

Quote from: ramesh on February 22, 2019, 11:05:52 AM
I received two (out of an expected eight) bank deposits from "RS Servicing LLC" yesterday, but no entries on the website dashboard.  I can only guess the deal they were distributed from.  What a mess!

I wrote to RS asking how I am supposed to identify the source of the distributions from my bank deposits when no updates are made to the dashboard.
I received the following response within an hour:

All distributions made will update in your dashboard in the next few days.
Thank you for your patience as we work through some operational change made to ensure more robust processes going forward.


I also pointed out to them that their lack of communication is causing their investors a fair amount of anxiety, and they should factor that in as they assess the LTV of their investor list.  I shared a link to this forum.  As expected, they didn't respond to that.