News:

To return to the forum homepage, please click the banner at the top of your browser.

Main Menu

Thoughts On RealtyShares Closing Its Doors To New Investors

Started by Sam, November 07, 2018, 11:29:29 AM

Previous topic - Next topic

John_PVF

Have some good news to share, it appears that one of Realty Shares' equity investments has successfully paid out.  Saw a larger-than-normal distribution in my bank acct this morning.  While the website hasn't been updated yet, I suspect it is the Plaza Apartments which was under LOI with a target exit before the end of the year. 

Assuming that's the one, I calculate an after fees (but pre-tax) ROIC of 38.4% and an 18.3% IRR, which is in-line with initial underwriting, over an approx. 2 year holding period.  Nice to see a favorable outcome when it feels like they've been few and far between of late.


ramesh

Here's another good outcome: IRM says that Camden South Carolina Multifamily debt also is likely to get paid off in its entirety. 

After the following disastrous outcomes in the last few months, I will be happy just to see my money back on this one: a 60%+ loss on NJ Multifamily, a 50% loss on the FG Church's Chicken deal in Colorado, and a 10% loss on the Wytheville Va Captain D's  debt deal.  This last one is the most shocking to me: RS signed off on an incomplete payment ("a common clerical error" in IRM's words) , the sponsors (Invest Squared) acknowledge the error , and yet have brazenly refused to pay the full amount because they can get away with it!

WengerTodd

Hmmm... looks like someone didn't like what I said here. I got a negative. It's unfortunate that this crowd-sourcing didn't work out. I've been really looking at real estate ventures like this. The one I was particularly interested in, the name completely slips my mind. But I was seriously considering it... I may still, but certainly not in large numbers.

The ones I prefer / like is where you have a company that merely handles the finances for independent home flippers. They advertise their projects on the website, and investors can pitch in a certain amount (usually $5,000 or more). They are often guaranteed at least some %, like 5 or 6 percent return, but also more depending on final sale. I prefer this system as you have less capital tied up, and you can more easily diversify your investment between multiple different projects and multiple different individuals. I think the risk is still the same though, it only takes one flipper to fail with your $5,000 to wipe out the profit of 10 other investments.

The benefit of the websites though are to vet these individuals and their liquidity. They're ranked depending on how successful they've been in the past as well.

stingray

@WengerTodd:  Thanks for your post.  After tax, the situation is even worse than you describe.  If you are an individual investor, the interest payments you receive are taxed as ordinary income, but defaulted loans are deductible only against capital gains.  This "tax headwind" is a key reason that I've stopped investing in crowdfunding real estate deals, where default rates are relatively high.

WengerTodd

Quote from: stingray on December 26, 2019, 09:25:36 AM
@WengerTodd:  Thanks for your post.  After tax, the situation is even worse than you describe.  If you are an individual investor, the interest payments you receive are taxed as ordinary income, but defaulted loans are deductible only against capital gains.  This "tax headwind" is a key reason that I've stopped investing in crowdfunding real estate deals, where default rates are relatively high.

Ouch, I hadn't considered that... thanks Stingray.

ReadyToSue89

#1165
Redacted

JD

Happy New Year everybody. I sure hope this year brings a lot better news from IRM and our existing RS investments.

My XMas gift from IRM and the Chicago Retail sponsor brought what appears to be a close to my 2 Chicago Retail investments and a near total loss on both. Considering these were 2 bridge financing loans that were supposed to take 12 months, paid interest for 3-4 and then defaulted, when the properties were supposedly going to be listed for sale as soon as the loan commenced, I have no question that the sponsor either never intended to pay them back or took advantage of RS position when RS shut its' doors.

Results:
Chicago Retail Portfolio Lockport - $20,000 invested, $1,375 principal returned for a loss of 93%.
Chicago Retail Portfolio Elmhurst - $15,000 invested, $149 principal returned for a loss of 99%.

Interestingly, the Elmhurst offering has not received any updates as to what happened with it so I can only presume it's under the same umbrella as Lockport and that the note was sold off at an even cheaper rate than Lockport. Lockport was sold at 15% of the original note value and then IRM and lawyer fees appear to have eaten another 8% - pretty pathetic already. So if Elmhurst was sold off for 9-10% of the original note value, the only people who ended up getting paid were the lawyers and IRM.

If IRM quietly moves this listing to Exited investments, I will certainly be requesting that they post an official update about it.

WengerTodd

Quote from: JD on January 02, 2020, 03:13:55 AM

Results:
Chicago Retail Portfolio Lockport - $20,000 invested, $1,375 principal returned for a loss of 93%.
Chicago Retail Portfolio Elmhurst - $15,000 invested, $149 principal returned for a loss of 99%.


I'm sorry JD, that really sucks...

groovydude

Quote from: ramesh on November 22, 2019, 08:17:04 AM
In one of my exchanges with IRM's customer service, the person said something like ".. but we didn't underwrite these messes" (I wasn't even pointing out anything about the outcomes, just expressing frustration about the absence of any reports of the financial condition of the businesses).    It is also clear that IRM is trying to wind  down these deals, and get then off  their porch as quickly as possible. I hope they don't wind these down without securing  the best outcomes for the investors, just because they can hide behind the fig leaf that this mess was not of their creation.  Their language certainly indicates that they are trying to do right by us investors, but a couple instances make me worry.

I have the same concerns. My feeling is that they may actually try to work a LITTLE for investors in their "Tier 1" assets. "Tier 2" may be getting some service, but they appear quick to settle for quick cash and close the deals, once they find cover for ditching the investment they'll take it. "Tier 3", forget it, they won't do much, if anything, to recover our losses.

At the end of the day, money and profit will rule all decisions. Since we're in the dark as to the terms of IRM's acquisition of RS, we're just guessing. However, in the case of underperforming loans, if IRM facilitates a sale of a loan at pennies on the dollar, we should be demanding detailed information about the project and the buyer. This has huge fraud potential. Sponsor X stops making payments, claims the project is in trouble, and suddenly some mystery buyer shows up offering to buy the loan at 10% of it's book value.

mspringer

Who is in on the Church's Chicken in Apopka, FL (Orlando)? 

I haven't looked into this for a while but last June we were returned literally $0.02 on the dollar for this investment.  I just looked and this Church's actually opened in the Fall and is being run by GOALZ franchise, who was the original franchisee all along.  I can't say I am an expert in this field, but this smells awful. 

This property was 95% complete in Jan '19 with a franchisee ready to take over.  The original company (Franchise Growth) defaults on all of their loans and thus this gets lost in the paperwork.  Then 8 months later it is open by the originally intended group (GOALZ) and we are supposed to believe this was just bad luck?


https://www.yelp.com/biz/churchs-chicken-apopka?osq=churches+chicken

ramesh

I am not in CC Apopka, but I am in CC Colorado.  I wrote to Eric Sullivan last week asking when we can expect to hear back about the proposed recapitalization by FG.  He says we should hear back inside 30 days.

mspringer

Quote from: ramesh on January 03, 2020, 06:31:52 AM
I am not in CC Apopka, but I am in CC Colorado.  I wrote to Eric Sullivan last week asking when we can expect to hear back about the proposed recapitalization by FG.  He says we should hear back inside 30 days.

Thanks ramesh.  I was hoping to get it all completed by Dec to avoid another tax filing in 2021, but...
will be happy to have it complete and hope for the best for us.

Beat_The_Fraud

******IRM Just emailed this update*****

Franchise Growth Forbearance Agreement Executed

Dear RealtyShares Franchise Growth Investor,

Further to our previous email communications regarding this matter, IRM has executed the forbearance agreement with the associated parties representing Franchise Growth, LLC entities. The agreement was signed on January 2nd, 2020 by all parties. The agreement requires Franchise Growth to deposit a $100,000 non refundable amount to begin the 90 days forbearance period.

IRM would like to re-emphasize the risk factors still associated with this investment, and quote from our last email:

"It is important to remember that while Franchise Growth agreed to these terms, their ability to pay is dependent on a successful raise of additional capital from new sources. If this process is unsuccessful, IRM intends to move quickly to foreclose on all assets and sell them at FMV (fair market value), in the best interest of investors."

The entities included in this agreement are:

AFC – 125 Sunrise Highway West Islip NY LLC
AFC-West 8040 Ulmerton Road Largo Florida Landco LLC
CC-1601 N Woodland Blvd Deland FL LLC
CD-1709 Midland Trail Shelbyville KY LLC
CD-2250 Cherry Road Rock Hill SC LLC
CHC-81 Street Westminster Co LLC
CHC-845 S Orange Blossom Trail Apopka FL LLC
CHC – 2015 North Wickham Road Melbourne FL LLC
CHC-2735 Calumet Trace Owensboro KY Landco LLC
CHC- 4684 Patterson Ave Winston Salem Landco LLC
DH-14400 Pardee RD Taylor MI, LLC
DH-4405 Route 36E Decatur IL, LLC
The Nashville Checkers and Taco John's in Antioch, TN (coded internally as RSN2624.1-3) is excluded from this agreement, and as such, IRM is now exploring alternatives for an expeditious foreclosure process and will update investors in that entity directly and separably from the Franchise Growth portfolio communications. IRM is forecasting losses in RSN2624 entities.

IRM will continue to post updates on this matter as they become available.

Hindsight2020

Quote from: mspringer on January 03, 2020, 05:16:10 AM
Who is in on the Church's Chicken in Apopka, FL (Orlando)? 

I haven't looked into this for a while but last June we were returned literally $0.02 on the dollar for this investment.  I just looked and this Church's actually opened in the Fall and is being run by GOALZ franchise, who was the original franchisee all along.  I can't say I am an expert in this field, but this smells awful. 

This property was 95% complete in Jan '19 with a franchisee ready to take over.  The original company (Franchise Growth) defaults on all of their loans and thus this gets lost in the paperwork.  Then 8 months later it is open by the originally intended group (GOALZ) and we are supposed to believe this was just bad luck?


https://www.yelp.com/biz/churchs-chicken-apopka?osq=churches+chicken



This restaurant appears to be on the list in the Franchise Growth update provided today. The fact that it's open and operating is better than the alternative, no? Especially if FG can't obtain financing and IRM winds up foreclosing on the property and then selling it?

mspringer

Quote from: Hindsight2020 on January 03, 2020, 09:37:30 AM
Quote from: mspringer on January 03, 2020, 05:16:10 AM
Who is in on the Church's Chicken in Apopka, FL (Orlando)? 

I haven't looked into this for a while but last June we were returned literally $0.02 on the dollar for this investment.  I just looked and this Church's actually opened in the Fall and is being run by GOALZ franchise, who was the original franchisee all along.  I can't say I am an expert in this field, but this smells awful. 

This property was 95% complete in Jan '19 with a franchisee ready to take over.  The original company (Franchise Growth) defaults on all of their loans and thus this gets lost in the paperwork.  Then 8 months later it is open by the originally intended group (GOALZ) and we are supposed to believe this was just bad luck?


https://www.yelp.com/biz/churchs-chicken-apopka?osq=churches+chicken



This restaurant appears to be on the list in the Franchise Growth update provided today. The fact that it's open and operating is better than the alternative, no? Especially if FG can't obtain financing and IRM winds up foreclosing on the property and then selling it?

Thanks Beat_the_Fraud for posting that as I still do not get emails from RS.

Yes, Hindsight, that is what I was thinking as well.  Let's hope all goes through as currently designed and we all come out somewhat whole and resolved.
Thanks again everyone for the updates.

realtyrealty

Did they already post money to your account?? I see the update that they brought the Chicago investment to a close, but have not seen any money transferred to my account.

Quote from: JD on January 02, 2020, 03:13:55 AM
Happy New Year everybody. I sure hope this year brings a lot better news from IRM and our existing RS investments.

My XMas gift from IRM and the Chicago Retail sponsor brought what appears to be a close to my 2 Chicago Retail investments and a near total loss on both. Considering these were 2 bridge financing loans that were supposed to take 12 months, paid interest for 3-4 and then defaulted, when the properties were supposedly going to be listed for sale as soon as the loan commenced, I have no question that the sponsor either never intended to pay them back or took advantage of RS position when RS shut its' doors.

Results:
Chicago Retail Portfolio Lockport - $20,000 invested, $1,375 principal returned for a loss of 93%.
Chicago Retail Portfolio Elmhurst - $15,000 invested, $149 principal returned for a loss of 99%.

Interestingly, the Elmhurst offering has not received any updates as to what happened with it so I can only presume it's under the same umbrella as Lockport and that the note was sold off at an even cheaper rate than Lockport. Lockport was sold at 15% of the original note value and then IRM and lawyer fees appear to have eaten another 8% - pretty pathetic already. So if Elmhurst was sold off for 9-10% of the original note value, the only people who ended up getting paid were the lawyers and IRM.

If IRM quietly moves this listing to Exited investments, I will certainly be requesting that they post an official update about it.

realtyrealty

Has anyone else heard anything about 405 Alberto? I have very high doubts this one will ever pay back.


Quote from: dminvestor2017 on November 07, 2019, 01:20:05 PM
Investors on 405 Alberto Way, Los Gatos, CA:
We received some positive notification today but I will not trust anything Randy Lamb and Lisa Lamb says until I actually see the money. Please continue to put pressure on Lamb Partners via email, phone calls, Google reviews, Yelp reviews, and other reviews until they completely fulfill their loan obligation. It's been more than a year since they stopped distributions and communication and they need to be held accountable. Thank you.

https://www.yelp.com/biz/lamb-partners-menlo-park
Lamb Partners
535 Middlefield Rd # 190
Menlo Park, CA 94025
Office 650.787.2746
Randy Lamb cell: 650.208.4195
Lisa Lamb cell: 650.208.3293
Email: info@lambpartners.com

JD

Quote from: realtyrealty on January 05, 2020, 01:29:00 PM
Did they already post money to your account?? I see the update that they brought the Chicago investment to a close, but have not seen any money transferred to my account.

Quote from: JD on January 02, 2020, 03:13:55 AM
Happy New Year everybody. I sure hope this year brings a lot better news from IRM and our existing RS investments.

My XMas gift from IRM and the Chicago Retail sponsor brought what appears to be a close to my 2 Chicago Retail investments and a near total loss on both. Considering these were 2 bridge financing loans that were supposed to take 12 months, paid interest for 3-4 and then defaulted, when the properties were supposedly going to be listed for sale as soon as the loan commenced, I have no question that the sponsor either never intended to pay them back or took advantage of RS position when RS shut its' doors.

Results:
Chicago Retail Portfolio Lockport - $20,000 invested, $1,375 principal returned for a loss of 93%.
Chicago Retail Portfolio Elmhurst - $15,000 invested, $149 principal returned for a loss of 99%.

Interestingly, the Elmhurst offering has not received any updates as to what happened with it so I can only presume it's under the same umbrella as Lockport and that the note was sold off at an even cheaper rate than Lockport. Lockport was sold at 15% of the original note value and then IRM and lawyer fees appear to have eaten another 8% - pretty pathetic already. So if Elmhurst was sold off for 9-10% of the original note value, the only people who ended up getting paid were the lawyers and IRM.

If IRM quietly moves this listing to Exited investments, I will certainly be requesting that they post an official update about it.

For Lockport, yes - I got the $1375 last week.

For Elmhurst, I'm less sure. I did get $149 deposited sometime last month and the investor portal notes that it was Principal. However, shortly after I posted here on the forum, IRM sent out an update about Elmhurst claiming they were just now handling the note payoff and distributions. So I'm not sure if the $149 is a misnomer in my portal or what's going on. I guess we'll see if there's another deposit sometime soon.

Also a bit funny they sent that update within a day of me posting here. I suspect someone from IRM is monitoring this forum, which is probably a good thing.

WengerTodd

Quote from: JD on January 06, 2020, 04:44:28 AM

Also a bit funny they sent that update within a day of me posting here. I suspect someone from IRM is monitoring this forum, which is probably a good thing.


That's probably the same person who's been doling out the negs on the profiles.

I would be so pissed, quite frankly. Going to be brutally honest... I think this deserves a class-action lawsuit. It's clear to me, just from reading these threads, this was a ponsi-scheme from the get-go. Real estate, and pretty much everything else has skyrocketed over the past few years. The fact that these investments, you guys are getting pennies on the dollar... it's complete and total fraud. Period.

If I was one of you, I'd be looking to hire a lawyer, and quickly. There's all kinds of things you guys should be looking at right now. I'm NOT a lawyer, but I've seen time and time again... you accept payment of any kind, even pennies on the dollar, and you're agreeing to that as a settlement.

I understand you all signed agreements when you did this, and understood it's a loss... but how does an investment company lose 95% of the money in a market where the real estate price growth has gone up exponentially over the past 5 years? Especially in the last 2-3 years. My home in South Florida is worth over half a million, and my home in San Antonio... after having been here for only 2 years, is worth almost double what I paid for it. Did these guys invest in Detroit? I mean, literally every real-estate market that's worth a damn, has had massive growth. It is totally beyond me how this organization managed to screw up so badly. Church's Chicken? That place is crazy-busy here in San Antonio, every single one I go to...

Maybe I just don't understand, and I'm sure I've managed to insult half the people in this thread (and for that I apologize). It's just that this whole thing has red flags of corruption, scheming, and outright fraud... and I think all of you should get together and get your money back. The money went somewhere, and my first indication this was all nonsense was when I saw mention of them setting up an LLC. That means YOU are screwed, and THEY are protected. I'm all for Capitalism, but this is good ole-fashioned Bernie Madoff action right here.

Sam

WengerTodd- Do you have investments that are losing money? If so share your thoughts and analysis to help and get help.

Deals are structured in different ways, and investors need to be aware of how they are structured to know their risk and return.

We are trying to determine whether sponsors are acting below board, or whether the deals were simply bad investments.

Many people posting here are those who have lost money and trying to figure things out. But most of the deals have made money, you just don't hear from them.
Regards,

Sam