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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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dwengca

Hello folks,

I'd appreciate some suggestions or feedback here.

Based on feedback from other 333 Parnassus investors, principle payments have been paid out from March 1st to March 4th.   However, I still have not received the 5k or close to 5k that I'm supposed to get.  Sent emails to RS and only have received "form" replies telling me to wait.

What should I do at this point?  I would hate to pull lawyers into this, but since they don't really respond to my inquires other than a boilerplate response, and there is no one I could call.   

Any suggestions?

Thanks,

Dennis

groovydude

Thanks Stingray! I appreciate your input. I'm just throwing out some ideas, and all input is great.

I'm fairly fortunate so far in terms of my individual investments btw, but thanks for the input on that front as well, I'm sure others can use it. However, I suppose that you're implying that RS employees are busy because many of the projects are underperforming, or many of the sponsors are "bad". If this is the case then I understand and believe what you're saying. As I said, mine are mostly performing pretty well, so it seems like their jobs should be quite easy - take money from the sponsor and distribute it to the investor, and put up a note on the website. I would imagine that this is mostly automated (perhaps what they spent some of that $60M on!).

Personally, I passed over most of the RS investments that I saw presented, I just didn't think they looked good, so it wouldn't surprise me if there are a lot that are in trouble.

stingray

@Dennis / dwengca:  1.  Try emailing one more time, again with a clear description of the issue.  2.  In my experience they do respond.  3.  If you have no success after 2 more days, and you are SURE, send them an old-fashioned demand letter explaining that you invested $_____ in the ABC deal on _____(date); your fellow investors have been repaid but you have not; RS still has $______ of investor funds that rightly belong to you, which they have been wrongly holding despite your written requests; and they must pay you your $_____.  Include proof and copies of your prior emails.  Don't be dramatic or threaten to sue.  Include your phone #. Spend $3 and send your letter certified so office personnel hand it to the lawyer.  Before you seal the envelope, get your green+white certified mail label, copy the label # onto the letter and take a picture for your records. Address your letter to Lawrence Fassler, General Counsel.  The State of California still has their address as:  RealtyShares, 525 Market Street Suite 2800, San Francisco, CA 94105.
Lastly, email a picture of the letter to:  contact@realtyshares.com with the subject line "Time-sensitive legal correspondence".
If you still don't have any luck 2 weeks after they receive your letter, come back and tell us about it.

dwengca

Quote from: stingray on March 12, 2019, 03:45:26 PM
@Dennis / dwengca:  1.  Try emailing one more time, again with a clear description of the issue.  2.  In my experience they do respond.  3.  If you have no success after 2 more days, and you are SURE, send them an old-fashioned demand letter explaining that you invested $_____ in the ABC deal on _____(date); your fellow investors have been repaid but you have not; RS still has $______ of investor funds that rightly belong to you, which they have been wrongly holding despite your written requests; and they must pay you your $_____.  Include proof and copies of your prior emails.  Don't be dramatic or threaten to sue.  Include your phone #. Spend $3 and send your letter certified so office personnel hand it to the lawyer.  Before you seal the envelope, get your green+white certified mail label, copy the label # onto the letter and take a picture for your records. Address your letter to Lawrence Fassler, General Counsel.  The State of California still has their address as:  RealtyShares, 525 Market Street Suite 2800, San Francisco, CA 94105.
Lastly, email a picture of the letter to:  contact@realtyshares.com with the subject line "Time-sensitive legal correspondence".
If you still don't have any luck 2 weeks after they receive your letter, come back and tell us about it.

Great feedback.  Thank you!  I will give it a try and report back.

groovydude

I received 3 more late deposits today and 2 payments for March (2 still due), so I feel like they are making good progress! A minor point of contention - whereby the ACH deposits used to show the RSN number of the investment, they appear to no longer do so.

I'm still missing January and February payments from 4039 95th Ave. Has anyone else received these payments from this investment?

cj60031

I received 7 payments today and I could not march payment numbers with any of my investments.  I think that it is going to take another 7-10 days for RS to update the notifications in my account.

dwengca

Quote from: dwengca on March 12, 2019, 04:02:10 PM
Quote from: stingray on March 12, 2019, 03:45:26 PM
@Dennis / dwengca:  1.  Try emailing one more time, again with a clear description of the issue.  2.  In my experience they do respond.  3.  If you have no success after 2 more days, and you are SURE, send them an old-fashioned demand letter explaining that you invested $_____ in the ABC deal on _____(date); your fellow investors have been repaid but you have not; RS still has $______ of investor funds that rightly belong to you, which they have been wrongly holding despite your written requests; and they must pay you your $_____.  Include proof and copies of your prior emails.  Don't be dramatic or threaten to sue.  Include your phone #. Spend $3 and send your letter certified so office personnel hand it to the lawyer.  Before you seal the envelope, get your green+white certified mail label, copy the label # onto the letter and take a picture for your records. Address your letter to Lawrence Fassler, General Counsel.  The State of California still has their address as:  RealtyShares, 525 Market Street Suite 2800, San Francisco, CA 94105.
Lastly, email a picture of the letter to:  contact@realtyshares.com with the subject line "Time-sensitive legal correspondence".
If you still don't have any luck 2 weeks after they receive your letter, come back and tell us about it.

Great feedback.  Thank you!  I will give it a try and report back.


Emailed them again, and got the same "we are switching administrator.. please wait" BS.   I'm going to send a certified demand later tomorrow.  If I still don't get my repayment within a week, will have to drag a lawyer in.

Mark

I just wanted to add some extra information to the list.

I have 5 debt investments with RealtyShares at this point in time.
Bar Tree Apartments
Redford Package 2
Mabel Townhome Development
North Carolina Church's Chicken
130 Bryant Ave. Walla Walla, WA

My payments used to show in my account as "ACH DEPOSIT FROM REALTYSHARES INC"
As of last week, I had not received payments from any investments for Jan/Feb.
Yesterday, I saw 3 deposits in my account from "ACH DEPOSIT FROM RS SERVICING LLC"
Nothing has shown up yet on my realty shares dashboard from these investments.  But from what I can tell, each deposit is 2 month payments of interest from 130 Bryant Ave, Church's Chicken, and Mabel Townhome.

So, it does appear as if the third party service "RS SERVICING LLC" is starting to catch up on the backlog of payments at this time...

finmaster

#388
As someone mentioned, it's counterproductive to pressure the RS staff to do more than what they can handle. Employees are just going to quit and drop the ball, even further delaying the transition. I'd give it until the end of March.  It looks like RS doing all the distributions manually and I can attest that it's a lot of work. Honestly, I am not even sure if there a software sophisticated enough to make distributions to all the investors for every deal. Awhile ago (about 10 years ago) I used to work in the accounting dept for some trustee and I did something similar. My job was to get funds from real estate sales proceeds and distribute them to investors. I was lucky to process 15 funds a day and each deal only involved 2-3 investors. The task involved, depositing funds from real estate sales into the trustee bank account, splitting the funds and send them to investors via wire transfer or checks which usually involved multiple supervisory verification to make sure the numbers are correct and then we had to enter the numbers into our company's ledger to balance it. It's a very tedious work. Given the current shortage of staff at RS and the number of deals and pieces the funds needs to be cut... I can only imagine what they are going through... it's a hell.

ramesh

I want to echo the views of @finmaster and @stingray.  RS is behind on payments on several deals in my case as well.  However, the fact that several others are reporting receiving payments (even if I am not) suggests to me that they are acting in good faith and  patience is warranted.  Speaking for myself  -- not advising anyone what to do -- I am going to give them a long enough leash on this one, since legal threats targeted at this understaffed stump of a company will only come around and bite us all.

dwengca

Quote from: John on March 14, 2019, 09:44:26 AM
I understand the delays and have been patiently dealing with them for a while. I don't understand why they posted on my account on the website weeks ago that they made payments I never received. There's a difference between delayed money and missing money. Inquires over missing money deserve an immediate response and acknowledgement. I know they are in a difficult situation and working hard, but it's essential in this situation to keep track of payment flows and notify them of discrepancies.

I agree with John.  I think some of us have been more than reasonable in terms of waiting.  I have payment that says credited on 2/27 on the website, but I still have not gotten the money, while several other investors in the same property have received theirs.  After several emails asking RS to check, and all I have gotten so far are template replies telling me to wait some more.   This is no longer reasonable in my opinion.

Dennis

CushLash

I'm in the same boat with most of you regarding significantly delayed payments from RS and complete lack of communication.  There are a couple of investments that I am personally invested in which I was wondering if there was anyone else on these forums who might be invested in as well?:

1) RS 277 - Lynnview Apartments 
2) RS 148 - Northwest Single Family Home

{RE: Lynnview Apartments -- I received the first update on the website today in over 60 days which stated that they were current on their monthly interest payments when in reality they have not made a payment to RS investors since the December payment....which is concerning}

Would love to link up with other investors in either of these deals to share experiences and any communication (or lack thereof) you may have had with RS staff.

Best
Brett

Sdb

Quote from: Sdb on March 08, 2019, 04:43:44 PM
Quote from: kierra on March 08, 2019, 09:26:25 AM
Quote from: Sdb on March 07, 2019, 06:29:50 PM
I sent RS a message to get some color on the recent Franchise Growth notifications. I received a response within 30 minutes. Asked that they allow them to conduct the call with " senior management" before responding further.

I am involved with the American Family Center (AFC) deal in Largo, FL, any word on this one?
r

I received two payments on the AFC Largo deal. I have three Franchise Growth investments, this is the first distribution on any since late January. Somewhat encouraging given the notifications that indicated that FG deals could be in default.

I'm afraid we are going to have to wait for a RS update. There are four AFC's already operating in the Tampa Bay Area, don't know if they are all owned by the same franchisee. If so, it would be probable that this would be an expansion. If not, it still should be a good market for this business. I do believe that there must be an issue with Franchise Growth as the same notifications came on multiple deals on the same day.

groovydude

Quote from: John on March 14, 2019, 09:44:26 AM
I understand the delays and have been patiently dealing with them for a while. I don't understand why they posted on my account on the website weeks ago that they made payments I never received. There's a difference between delayed money and missing money. Inquires over missing money deserve an immediate response and acknowledgement. I know they are in a difficult situation and working hard, but it's essential in this situation to keep track of payment flows and notify them of discrepancies.

John, I think you're making a good point. We should all keep detailed records of overdue payments and deposits. I plan on sending weekly notices to their email until they are squared away.

groovydude

Quote from: John on March 14, 2019, 04:08:09 PM
There's one other issue that's tough to deal with, but we have no choice except to allow RS to run their process with it--bad sponsors. I believe there are two types. 1) Ones that are trying to capitalize on the RS situation to make discounted principal repayments or drag out maturities that are past due. That is what it is--a civil/contractual issue. 2) Ones that might have acted inappropriately and possibly done something illegal. I have a deal where the sponsor raised money using a business plan that they never implemented. They are in principal and interest payment default, and based on the last financials they provided (which were a complete handmade joke on a spreadsheet), some assets were apparently removed from the entity without any compensation to the entity. Now the sponsor is unresponsive. The signs have been there quite a while, but the oversight of this investment was very poor. So now I'm just waiting for RS to arrive at a resolution, and once that's completely done, will decide what to do next.

John, perhaps a new thread is in order, something like "Realty Shares Troubled Investments" or "Realty Shares Troubled Sponsors"?

daletucker50

sorry if this is a repeat question... has anyone received any 1099s yet?

groovydude

Quote from: John on March 15, 2019, 08:46:34 AM
I don't want to call out bad sponsors on here. After I contacted a couple of sponsors RS told me sponsors aren't allowed to talk to me anyway as part of their partnership agreement with RS. I want RS' process to run its course first. Once that's done, if I believe there was illegal activity that resulted in loss I will notify the appropriate state AG(s).

You seem to be very protective of RS John. Just my opinion. I don't want to burden them with more work than they already have, but I do want them to understand that I'm not going to just blow them a kiss if they stop doing what I pay them to do. As long as the investments are performing, they'll be taking their cut of the proceeds, which should give them ample operating capital to pay a staff to manage distributions and answer emails.

One can only speculate, but I find it hard to believe that their contracts prohibit the sponsors from "talking" with RS investors. It would make more sense that they are prohibited from reaching out to RS investors, which is what I was told by a sponsor. Anyone can call a company and ask to talk with someone, the person on the end of the line will likely engage in conversation. I've been in the syndication game for a long time, I've never known a sponsor that wasn't eager to develop a relationship with a potential investor.

As for calling out "bad" sponsors, what's your rational for not doing that here? It seems like the perfect place for that to me. I'd like to know if one of my sponsors is having trouble meeting their performance expectations, even if it's on a different investment. ESPECIALLY since RS is currently TERRIBLE at communicating. Also, perhaps we can call them "troubled" and not "bad" - seems a bit excessive to me unless they're downright crooks.

mspringer

Quote from: daletucker50 on March 15, 2019, 09:37:08 AM
sorry if this is a repeat question... has anyone received any 1099s yet?

daletucker50-- I think most 1099s were mailed in early to mid February.  I also noticed mine are now posted on the website (just showed up last week).  However, I have not seen a K-1.  Last year's K-1 for my investment is dated 4-Apr and I anticipate this year's will be even later with the lack of personnel at RS to work it through whatever system they have set up.

finmaster

#398
Unfortunately, it's true that technically you are not supposed to contact your sponsors since RS is serving as the trustee. The role of a trustee is really taking care of all the paperwork, distributions, communication and the legal work for both parties'. There is a reason why RS is the middle man and that's what they are charging their management fee for. But given RS's current trend especially with their poor communication and delayed distributions, trying to reach out to the sponsor is definitely warranted. Also I want to mention that whatever cut RS gets from managing all these deals is not going to be a guaranteed profit as there will be unforeseeable legals costs for dealing with defaulted properties which may or may not have to come out of their own pocket. I personally don't see why RS would hire more staff from a profit stand point of view at this point in the midst of transition. It would be futile to hire a bunch of staff only to let them go once they sell off their portfolio.

groovydude

Quote from: finmaster on March 15, 2019, 10:00:43 PM
Unfortunately, it's true that technically you are not supposed to contact your sponsors since RS is serving as the trustee. The role of a trustee is really taking care of all the paperwork, distributions, communication and the legal work for both parties'. There is a reason why RS is the middle man and that's what they are charging their management fee for. But given RS's current trend especially with their poor communication and delayed distributions, trying to reach out to the sponsor is definitely warranted. Also I want to mention that whatever cut RS gets from managing all these deals is not going to be a guaranteed profit as there will be unforeseeable legals costs for dealing with defaulted properties which may or may not have to come out of their own pocket. I personally don't see why RS would hire more staff from a profit stand point of view at this point in the midst of transition. It would be futile to hire a bunch of staff only to let them go once they sell off their portfolio.

That's a great point, thanks. There's always a delicate balance for any business in providing good customer service and maximizing profits. Let's hope that whomever buys their assets has something to gain by providing good service. This is the point I made in my original post, and I think a little skepticism can be constructive.