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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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Spartan

Sent an email requesting an update on 27983 Central Drive. After resending it a few times I received the following response (March 5)...

"Thank you for your email. We will provide an update on the status of the property as soon as it becomes available from the sponsor. When notifications are posted in your dashboard, an email will also be sent to alert you.

I have also pinged our Asset Management team to ask if they can provide a new update since the information provided seems a bit out of date.

As for your late distributions, we are in the process of onboarding a fund manager to handle them and we have experienced some delays during the transition process but we have started distributing. We apologize for this delay and we appreciate your patience."

Then there was an update on the notifications section of the website.
"27983 Central Drive 3/5/2019
03/05/2019
The borrower has asked to extend the loan. He reports that rain and site issues have delayed the completion, but that he is back on track and there should be no obstacles to finishing the construction.  RealtyShares will be extending the loan and accruing interest payments until payoff to allow him to finish the house. RealtyShares will update you upon the occurrence of significant events."

No distributions made in Feb or thus far in Mar.

TryinToMakeIt

I did a total of seven investments with RS, five of which exited successfully (more or less, more on that below); two are still in progress:

Retail at Utica Corners
Marriot Courtyard Columbus

I'd be interested to hear from anyone else on this board who is also in those deals.

I did get an update to Marriot today, as follows:
QuoteRealtyShares has not yet obtained a complete Q4 2018 update from the sponsor. We continue to reach out to the sponsor and will post the information upon receipt.

Marriot has posted on yields since late 2017, Utica has posted no yields in nearly a year.

I have had some limited success getting info from RS via email - they said they'd 'ping' the sponsor for Utica since they have not heard in a while. I've also been told, regarding payouts on Marriot:
Quote...due to the change in the payment method for the borrowers, January distributions may be slightly delayed.

That seems similar to language others have shared here and elsewhere - I guess it remains to be seen what this will mean for us.

I have an additional issue that I want to share, just in case it will help someone else:

I did a full audit of past distributions and found multiple payments which RS said they made but were not received and deposited to my SD IRA. The IRA company just completed an investigation and could find no evidence of receipt of the reported distributions. RS has had the info on the missing payments for over two weeks, and up to this time, the only response I have from them is that they are looking into it.

It may be too late, but I'd encourage any other RS investors to reconcile the reported returns on their investments with actual payments/deposits received.  Ledgers of returns can be found in your RS portal account. This got away from me because the payments were going directly to my IRA and I was not being consistent with reconciling those statements against info from RS.


Sdb

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.

dmk395

210 Aerie Court - 03/06/2019
03/07/2019
The current extension period is through June 2019. We are reconciling payments as the borrower claims that he is current on payments. We will update you as soon as we are able to confirm and will distribute any funds received.

Here's my most recent response from RS.  This is all SOOOO SHADY


kierra

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?

Followthesunand72

As has been reported by others, I have received payment on 333 Parnussus debt deal.

I didn't quite receive my full principal but due to the protracted foreclosure process, I feel pretty good about that.

Lawyers are likely the only ones who got full payment.

stingray

@TryinToMakeIt:  Sorry to hear about the apparent discrepancies between your RealtyShares and IRA account.  I have ACH from RealtyShares to my bank account and have always checked to make sure every transfer goes through.  I have seen 100% accuracy on all transfers.  That said, sometimes if RealtyShares shows two payments from the same sponsor on the same date, they are added together on the ACH.  This creates a bit of confusion.  Also the description on the ACH advice line may have changed.  Good luck reconciling your books.

Sdb

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'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.

dwengca

Quote from: Followthesunand72 on March 08, 2019, 01:04:37 PM
As has been reported by others, I have received payment on 333 Parnussus debt deal.

I didn't quite receive my full principal but due to the protracted foreclosure process, I feel pretty good about that.

Lawyers are likely the only ones who got full payment.

May I ask when did you actually received the payment in your bank account?  I still have not gotten mine yet... 

finmaster

#369
I just received a bunch of distributions from RS. Someone mentioned about Utica, but I've been  getting a steady distribution from the Utica Square Apartment deal every quarter. As a matter of fact, one of the distributions that I've just received was from Utica. I am not sure if that's the deal you are in. I don't see any distribution from Captain D, Shelbyville though but they only missed last month's so I am not too concerned. I am pretty positive that RS will come around and catch up with all the late distributions but I can't say much about some of the poorly vetted deals since they are fundamentally flawed from the very beginning.

deepminds

Quote from: dwengca on March 09, 2019, 09:51:44 AM
Quote from: Followthesunand72 on March 08, 2019, 01:04:37 PM
As has been reported by others, I have received payment on 333 Parnussus debt deal.

I didn't quite receive my full principal but due to the protracted foreclosure process, I feel pretty good about that.

Lawyers are likely the only ones who got full payment.

May I ask when did you actually received the payment in your bank account?  I still have not gotten mine yet...

I was also an investor in the 333 Parnassus property.  I received my principal payment back (minus a bit less than 1%) via ACH into my checking account on March 1st.   I didn't receive a notification in my RS dashboard until May 5th.   

Within a few days of that I also received payments due on a couple of other ongoing deals via RS, so looks like they may be batching them in chunks.


dwengca

Quote from: deepminds on March 10, 2019, 08:27:07 AM
Quote from: dwengca on March 09, 2019, 09:51:44 AM
Quote from: Followthesunand72 on March 08, 2019, 01:04:37 PM
As has been reported by others, I have received payment on 333 Parnussus debt deal.

I didn't quite receive my full principal but due to the protracted foreclosure process, I feel pretty good about that.

Lawyers are likely the only ones who got full payment.

May I ask when did you actually received the payment in your bank account?  I still have not gotten mine yet...

I was also an investor in the 333 Parnassus property.  I received my principal payment back (minus a bit less than 1%) via ACH into my checking account on March 1st.   I didn't receive a notification in my RS dashboard until May 5th.   

Within a few days of that I also received payments due on a couple of other ongoing deals via RS, so looks like they may be batching them in chunks.

Thank you for the info.  This is really upsetting.  I still have not receive it yet, and this is also after 2 emails that I sent asking about it.

Dennis

mspringer

FWIW, I just saw this morning that my 1099 for 2018 is now posted on RS.  I know these came in the mail last month and I assumed they would never be posted.  So while not real valuable at this point, at least it's progress.  Too bad it's not the K-1 I need.  I understand you can file an extension but I would much rather have to deal with the tax stuff (forms, CPA, etc.) just once and not multiple times and without really a true idea of when the K-1 will actually come in.

but hey, at least I have no one at RS to get clarity from.

Followthesunand72

Quote from: dwengca on March 10, 2019, 11:33:25 AM
Quote from: deepminds on March 10, 2019, 08:27:07 AM
Quote from: dwengca on March 09, 2019, 09:51:44 AM
Quote from: Followthesunand72 on March 08, 2019, 01:04:37 PM
As has been reported by others, I have received payment on 333 Parnussus debt deal.

I didn't quite receive my full principal but due to the protracted foreclosure process, I feel pretty good about that.

Lawyers are likely the only ones who got full payment.

May I ask when did you actually received the payment in your bank account?  I still have not gotten mine yet...

I was also an investor in the 333 Parnassus property.  I received my principal payment back (minus a bit less than 1%) via ACH into my checking account on March 1st.   I didn't receive a notification in my RS dashboard until May 5th.   

Within a few days of that I also received payments due on a couple of other ongoing deals via RS, so looks like they may be batching them in chunks.

Thank you for the info.  This is really upsetting.  I still have not receive it yet, and this is also after 2 emails that I sent asking about it.

Dennis

I received payment on 3/4 and RS notification a few days later.

ramesh

I wrote to RS expressing concern about not receiving payments on several investments in February.  Here is their response:

Thank you for your email. We are in the process of onboarding a fund manager to handle our distributions and we have experienced some delays during the transition process but we have started distributing. We apologize for this delay and we appreciate your patience.

dwengca

Quote from: Followthesunand72 on March 11, 2019, 10:32:11 AM
Quote from: dwengca on March 10, 2019, 11:33:25 AM
Quote from: deepminds on March 10, 2019, 08:27:07 AM
Quote from: dwengca on March 09, 2019, 09:51:44 AM
Quote from: Followthesunand72 on March 08, 2019, 01:04:37 PM
As has been reported by others, I have received payment on 333 Parnussus debt deal.

I didn't quite receive my full principal but due to the protracted foreclosure process, I feel pretty good about that.

Lawyers are likely the only ones who got full payment.

May I ask when did you actually received the payment in your bank account?  I still have not gotten mine yet...

I was also an investor in the 333 Parnassus property.  I received my principal payment back (minus a bit less than 1%) via ACH into my checking account on March 1st.   I didn't receive a notification in my RS dashboard until May 5th.   

Within a few days of that I also received payments due on a couple of other ongoing deals via RS, so looks like they may be batching them in chunks.

Thank you for the info.  This is really upsetting.  I still have not receive it yet, and this is also after 2 emails that I sent asking about it.

Dennis

I received payment on 3/4 and RS notification a few days later.

Thanks!  I wrote them asking why some of the investors have already received their princple payment, and I have not.  Looks like I got a generic response, this person never addressed why others may have gotten the payment and why I have not. 

Hello Dennis,

Thank you for your email. We are in the process of onboarding a fund manager to handle our distributions and payoffs and we have experienced some delays during the transition process but we have started distributing. We apologize for this delay and we appreciate your patience.


TryinToMakeIt

Quote from: stingray on March 08, 2019, 04:22:58 PM
@TryinToMakeIt:  Sorry to hear about the apparent discrepancies between your RealtyShares and IRA account.  I have ACH from RealtyShares to my bank account and have always checked to make sure every transfer goes through.  I have seen 100% accuracy on all transfers.  That said, sometimes if RealtyShares shows two payments from the same sponsor on the same date, they are added together on the ACH.  This creates a bit of confusion.  Also the description on the ACH advice line may have changed.  Good luck reconciling your books.
@stingray, they've been reconciled, the missing payments are real. I've put RS on notice that I'll be handing things off to legal if they don't get back to me by week's end.

TryinToMakeIt

Quote from: finmaster on March 09, 2019, 09:49:28 PM
I just received a bunch of distributions from RS. Someone mentioned about Utica, but I've been  getting a steady distribution from the Utica Square Apartment deal every quarter. As a matter of fact, one of the distributions that I've just received was from Utica. I am not sure if that's the deal you are in. I don't see any distribution from Captain D, Shelbyville though but they only missed last month's so I am not too concerned. I am pretty positive that RS will come around and catch up with all the late distributions but I can't say much about some of the poorly vetted deals since they are fundamentally flawed from the very beginning.
@finmaster I am in Retail at Utica Corners, a commercial property deal, apparently different than the one that you are in.

groovydude

#378
I'm new to this forum, and I'd like to say that it's a relief to know that there's a way to communicate with other RS investors. Thanks Sam!!!

My post today is to discuss the situation with RS closing as a whole.  Like everyone here, I was concerned with the closure announcement in November. I became even more concerned in the last few weeks since I did not receive any distributions for February. I have 7 active investments with RS, all of which have performed from fair to well, and RS has been ok at making distributions on time until now, but no deposits for February sent up a very red flag with me. I emailed them, with no response, until several days later I got this:

"We are in the process of onboarding a fund manager to handle our distributions and we have experienced some delays during the transition process but we have started distributing."

That message arrived last Wednesday from someone named Juan (email address is still Amy). I did get one RS deposit yesterday followed by a notification on the RS site, which I presume is a good sign, but they are still behind on 6 others. Regardless, all this does substantiate the following theory (which has been suggested in this forum by Sam and others): RS is selling their assets, and the buyer has made a condition of the sale that they transfer management of the funds to a third party. It seems pretty clear that Assure.com is the third party manager from what I've read here.

However, that only gives me mild reassurance that things will all work out in the long run. We have no idea who will be taking over the assets and what our recourse might be should this new owner fail to make distributions from investments that are performing, or should any investments fail to perform. Individually, we have almost zero leverage in "asking" RS for anything (or the new owner), as we're essentially creditors of an almost dead company, and this does not make me feel good. I don't see a need to rush into action yet, but I'd like some discussion about actions we, as a group, might be able to take from here. Here are some admittedly pretty wild ideas:

1. Ask the appropriate authority for a criminal investigation. I don't follow this sort of thing often, but it seems like burning through at least $60M in a few years for a tiny internet company is way beyond just poor management. If you believe Nev Athwal when he stepped down, RS was in the best shape ever a year ago. Where did all the money go? If there was malfeasance, certainly the perpetrators should be brought to justice, but even if this is the case will a criminal investigation help us as investors?

2. Find an attorney to represent us as a group and force RS (or the new owner) to abandon management of the fund, returning management of the investments to the sponsors. This is just a thought, I have no idea if this is even possible.

3. Ask our sponsors to back out of their contracts with RS and honor our investments individually. As I mentioned, we have almost no leverage with RS, but we do have some clout with the sponsors. It's in their best interest to nurture their relationships with us, and not at all in their interest in keeping RS happy. I'm sure they all have contracts with RS, but contracts can be broken (or bought out).

Of course, we can just sit back and keep our fingers crossed. That might be the best recourse in the end, but it can't hurt to discuss other, more proactive options.  One thing is for sure, if we band together we have a fair amount of clout here, I'm guessing our investments represent a substantial share of the total AUM. Share your thoughts and ideas please!

stingray

@GroovyDude:  I understand your frustration.  I am not here to defend RS but would like to make a few observations:

1.  Burning through $60M happens all the time at Bay-Area tech startups who are trying to outgrow their competition at all costs.  I don't see that particular fact is a criminal act.  Remember, when you say "criminal" you are proposing that people should be locked up.  Maybe somebody should be locked up; I don't know; but one needs a better reason.

2.  I don't see how you could transfer management of the investments to the sponsors.  No real estate developer will deal with 100s or 1000s of angry investors, send out all those tiny ACH transfers, and prepare tax forms.  Also, I assume you don't know any sponsors like I do.  The good sponsors will pay RS back, and you will receive that money net of fees.  The bad sponsors (and there are many) are not going to manage your investment for you.  They have already stolen it and are trying to hide.  I can tell you first hand that RS is doing their level best to go after those bad actors.

3.  I don't see how sponsors can back out of their contracts with RS. Also, I think the sponsors DO care about RS because unlike you or me, RS has a contract they can enforce.  RS is in fact enforcing some of those contracts.  The sponsor does not care about you or me, people who have no directly contractual relationship and might have invested only $10K-$100K in the deal.  They will not be borrowing from RS investor Joe Schmo and his friends in the future and don't care what Joe says about them on Facebook or Twitter.

I am not suggesting we sit back and keep our fingers crossed.  If somebody has defaulted, make sure RealtyShares is pursuing them.  Ask RS if they've filed suit and ask for the court and docket #.  Then you can follow the case in real time without waiting for an update from RS.  There is a good example on this thread where people have been following the New England High Yield Portfolio case in Connecticut Superior Court.

If you are worried about fraud, research what sponsors may have done with your money.  For example, I have found a lot of useful information on county deed sites, Zillow, and town council meeting minutes  If you have strong evidence that a sponsor has committed fraud, then by all means report it to your state attorney general or securities regulator.  Just be careful that you document your assertions.

My overall message is that if you give RS a hard time you will pull them away from doing their job, which is to get your money back, ideally with the return that you expected.  Most of the RS people you communicate with came on board AFTER the meltdown.  They are genuinely doing their best to get your money back.  And right now they have harder jobs than IRS employees.  Try to be nice to them.

**I am an RS investor, not an employee or friend.  I am seething about this situation as much as the next person**