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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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Lionking

Quote from: dwengca on March 04, 2019, 02:58:49 PM
Quote from: Lionking on March 04, 2019, 02:31:27 PM
Quote from: dwengca on March 04, 2019, 12:39:38 AM
The RS site is really messed up for me now. 

1. 02/27/2019   Principal   --   Crediting   
333 Parnassus Avenue
RSL.2016B.65 • RSN1526.1-1
$496,056.00   

I have only invested $5000 on Parnassus, but the above update shows that I have a credit of 496k.  However, I did not receive a penny so far.

2   02/18/2019   CashYields   --   Credited   
Corey Place
RealtyShares 391 LLC • RSN3860.1-1
$24,961.00   

While I have invested 20k on Corey Place, I certainly did not receive a distribution on it this money.  Never mind on this crazy incorrect amount of 24k.

I really don't know what the heck the remain folks at RS are doing....

I have the same issue but it is really missing decimal.  So most likely your payments are $4960 and $249.61

Thanks!  Have you actually received the payment on 333 Parnassus in your bank account yet?  I have not myself.    The 4960 would seen to match my $5000 investment.   I am wondering if this is the complete payout or is this a partial payment.

Thanks!

Sorry - mine was for a different transaction.

daletucker50

Quote from: stingray on March 02, 2019, 05:28:03 AM
Anybody else out there invited in an ROIPGM deal?  I have made some potentially unfortunate discoveries about the Sponsor.

I am. I posted their most recent notification to me regarding situation.

sdnerd

Received this today in re: to the Detroit MSA Dog Haus and Taco John's:

"
Detroit MSA Dog Haus and Taco John's Tranche 4 3/5/2019
03/05/2019
RealtyShares has come to a negotiated settlement to sell the loan. The borrower reports that the franchisee who had entered into a turnkey lease for both a Dog Haus and a Taco John has declared bankruptcy.  The building on the property has been demolished but no other work was completed. Without the lease, the property is less valuable. The land value at the time of the July 25, 2017 appraisal was $990,000. This value is fair market value without the lease.  We have negotiated a $1.5MM sale of the loan. the returns on the loan are as follows:
"

Then the table is:

Detroid Dog Haus Returns
Original Principal: $4,091,000

Investor Returns
Discounted Payoff: $1,500,000
Unused Rehab Reserve Returned to Investors When Sale Closes: $2,229,783
Interest Paid to Date: $615,174
Total Returned to Investor: $4,344,957

Total Return: 6.21%


The 'what appears to be good news' on this one is won't be losing money on it. Will believe it once the money actually gets returned.

ramesh

@sdnerd  Thanks for sharing.  On the face of it this sounds encouraging not only for the deal investors, but for the rest of us as well.  I have been very worried about debt deals defaulting and causing significant principal loss because of a weakened RS.  Good to see them show some negotiating+legal strength.

As you say, we will have to wait and watch if they really come through.

sdnerd

Quote from: ramesh on March 05, 2019, 03:10:21 PM
@sdnerd  Thanks for sharing.  On the face of it this sounds encouraging not only for the deal investors, but for the rest of us as well.  I have been very worried about debt deals defaulting and causing significant principal loss because of a weakened RS.  Good to see them show some negotiating+legal strength.

As you say, we will have to wait and watch if they really come through.

It is worth noting that this particular deal never began the actual construction; just demo of existing structure. So a large chunk of the original raise was never actually deployed and spent on construction/etc. I'm hoping the other deals all close out well, but at the same time trying not to get my hopes too high because of this one. Fingers crossed for everyone.




sdnerd

Quote from: John on March 05, 2019, 03:06:43 PM
Quote from: sdnerd on March 05, 2019, 02:07:17 PM
Received this today in re: to the Detroit MSA Dog Haus and Taco John's:

"
Detroit MSA Dog Haus and Taco John's Tranche 4 3/5/2019
03/05/2019
RealtyShares has come to a negotiated settlement to sell the loan. The borrower reports that the franchisee who had entered into a turnkey lease for both a Dog Haus and a Taco John has declared bankruptcy.  The building on the property has been demolished but no other work was completed. Without the lease, the property is less valuable. The land value at the time of the July 25, 2017 appraisal was $990,000. This value is fair market value without the lease.  We have negotiated a $1.5MM sale of the loan. the returns on the loan are as follows:
"

Then the table is:

Detroid Dog Haus Returns
Original Principal: $4,091,000

Investor Returns
Discounted Payoff: $1,500,000
Unused Rehab Reserve Returned to Investors When Sale Closes: $2,229,783
Interest Paid to Date: $615,174
Total Returned to Investor: $4,344,957

Total Return: 6.21%


The 'what appears to be good news' on this one is won't be losing money on it. Will believe it once the money actually gets returned.

I'm in this deal, too. It's true that the total sum of cash flows will exceed principal invested if this is correct. However, we are actually realizing a capital loss in that we will recover 91% of principal invested. The interest they cite was paid and taxed previously. That said, I'd be happy to get closure on this and move on.

Once this is done I would only have 1 Franchise Growth deal left.

I invested $10,000 in this particular deal, and received $1,200 in payments.

On a 91.x% principal return they state, that comes out to $9,117, for a grand total of $10.317 including the payments. Indeed that $1,200 has been received and taxed. Everyone can play with their own marginal tax rate, but even if you take 50% of that all things considered... this one feels like a bullet dodged. RS going under, a construction project that had a false start, and a bankruptcy all at play.

At this point if I can get out of every remaining RS deal breaking even or with a small + or - figure like that, I'll consider it a big win. :)

Assuming this one closes as stated; I'll be down to 3 remaining deals with RS. 2 of which with Franchise Growth.



mspringer

Quote from: sdnerd on March 05, 2019, 06:51:44 PM
Quote from: John on March 05, 2019, 03:06:43 PM
Quote from: sdnerd on March 05, 2019, 02:07:17 PM
Received this today in re: to the Detroit MSA Dog Haus and Taco John's:

"
Detroit MSA Dog Haus and Taco John's Tranche 4 3/5/2019
03/05/2019
RealtyShares has come to a negotiated settlement to sell the loan. The borrower reports that the franchisee who had entered into a turnkey lease for both a Dog Haus and a Taco John has declared bankruptcy.  The building on the property has been demolished but no other work was completed. Without the lease, the property is less valuable. The land value at the time of the July 25, 2017 appraisal was $990,000. This value is fair market value without the lease.  We have negotiated a $1.5MM sale of the loan. the returns on the loan are as follows:
"

Then the table is:

Detroid Dog Haus Returns
Original Principal: $4,091,000

Investor Returns
Discounted Payoff: $1,500,000
Unused Rehab Reserve Returned to Investors When Sale Closes: $2,229,783
Interest Paid to Date: $615,174
Total Returned to Investor: $4,344,957

Total Return: 6.21%


The 'what appears to be good news' on this one is won't be losing money on it. Will believe it once the money actually gets returned.

I'm in this deal, too. It's true that the total sum of cash flows will exceed principal invested if this is correct. However, we are actually realizing a capital loss in that we will recover 91% of principal invested. The interest they cite was paid and taxed previously. That said, I'd be happy to get closure on this and move on.

Once this is done I would only have 1 Franchise Growth deal left.

I invested $10,000 in this particular deal, and received $1,200 in payments.

On a 91.x% principal return they state, that comes out to $9,117, for a grand total of $10.317 including the payments. Indeed that $1,200 has been received and taxed. Everyone can play with their own marginal tax rate, but even if you take 50% of that all things considered... this one feels like a bullet dodged. RS going under, a construction project that had a false start, and a bankruptcy all at play.

At this point if I can get out of every remaining RS deal breaking even or with a small + or - figure like that, I'll consider it a big win. :)

Assuming this one closes as stated; I'll be down to 3 remaining deals with RS. 2 of which with Franchise Growth.

sdnerd,
I may have missed this within the string, and certainly haven't seen an update on it from RS, are you saying Franchise Growth has declared bankruptcy?  I have an investment with them for a Church's Chicken in Apopka, FL.  For that one, at least based on previous updates, they are finalizing the build of the restaurant and then will sell.  There's also a group named Goalz, LLC that I think will be taking over the lease once it is ready and has it as "Coming Soon" on their website.  Again I'm just trying to put puzzle pieces together, and most of that info has come from this string and not RS.
Thanks for your feedback

ramesh

 @mspringer

Here is what I have been able to piece together.  Franchise Growth Inc is the borrower/sponsor on the various deals you, I and sdnerd are involved in.  In my deal,  Goalz LLC is the franchise operator, though they weren't the franchisee in the original listing, and from all appearances they are in good shape.  I am figuring that the deal that sdnerd is talking about had a different franchisee, and they went belly up.

ManOfLeisure

Quote from: ManOfLeisure on February 18, 2019, 07:48:31 AM
I'm a bit concerned about the change of focus, reduction of staff, etc. means for RealtyShares funds that are involved in legal action due to non-payment. I was invested in RealtyShares 195, LLC, which was an investment in Boston area residential. The sponsor stopped making payments, fraud (and possibly embezzlement) concerns developed, and now there's a lawsuit. Looking up the court case, I was shocked to find there are EIGHT different RealtyShares funds that are plaintiffs in the case. Knowing at least two of these LLCs were $1 million+ equity funds, I expect there's probably $5 million in capital tied up in this suit, and that's just RealtyShares' involvement.

This case is clearly going to be a drawn out legal battle that will last years. I don't have any expectation of seeing my investment back, given the costs that I'm sure will accrue with the extensive bills (forensic accountants, lawyers, etc.). Thankfully, it was a very small amount of money I had invested, since I was just dabbling in crowdsourced RE at the time to see if it was something I wanted to become more heavily involved in.
For anyone invested in:

RealtyShares 195, LLC (New England Home Fund I)
RealtyShares 236, LLC (New England Home Fund II)
RealtyShares 177, LLC
RealtyShares 178, LLC
RealtyShares 180, LLC
RealtyShares 184, LLC
RealtyShares 249, LLC
RealtyShares 280, LLC

You can follow the lawsuit at http://civilinquiry.jud.ct.gov/CaseDetail/PublicCaseDetail.aspx?DocketNo=NNHCV186084279S

I don't know the names of all the RS funds involved but they're all in the Boston area (New England funds). RS has a total of $8,732,000 tied up with the defendants being sued. The Connecticut court system has a pretty awesome website. At the link above you can read all the court filings. I'm just hoping that whatever happens to RS, there will still be money to pay the lawyers involved in the suit.

Of course these were equity deals for RS, which means sister lawsuits have all been filed by the debtors as well. The lead partner for Alliance Realty Capital, Michael Massimino, is currently a defendant in 24 civil suits over his real estate dealings. He must be living at the courthouse.

markm

@crowd_invest211

Saw Baton Rouge property listed as one of your investments - I have debt financing as well with this property.  Received an email from RS yesterday (3/5) stating sponsor has paid-in-full and investors should expect payout by end of month.  Fingers crossed on this one. Did you get a similar notice?

mspringer

Quote from: ramesh on March 06, 2019, 07:14:56 AM
@mspringer

Here is what I have been able to piece together.  Franchise Growth Inc is the borrower/sponsor on the various deals you, I and sdnerd are involved in.  In my deal,  Goalz LLC is the franchise operator, though they weren't the franchisee in the original listing, and from all appearances they are in good shape.  I am figuring that the deal that sdnerd is talking about had a different franchisee, and they went belly up.

@ramesh,
Thanks for the clarification.  I did reach out to Goalz via email on Monday but have not heard back yet.

crowd_invest211

@markm

Yes I did.  I'm glad, as this is one of two higher risk (second lien) deals I have with RS. 

Also got the notification on the Detroit MSA Dog Haus & Taco John's as others have.

So this gives us hope that wheels are turning albeit extremely slowly and with many missteps (I also received notification earlier that I was receiving someone else's distributions along with my own for another deal so future distros would be deducted).  So we should be looking a bit closer at the distribution amounts we are receiving as there seem to be major issues with the process or platform still being worked through.

Quote from: markm on March 06, 2019, 07:55:10 AM
@crowd_invest211

Saw Baton Rouge property listed as one of your investments - I have debt financing as well with this property.  Received an email from RS yesterday (3/5) stating sponsor has paid-in-full and investors should expect payout by end of month.  Fingers crossed on this one. Did you get a similar notice?

Dgilpin

It's good to find other people here acquiring important information we aren't being given by RS.  Definitely a bit of relief getting news of the taylor MI deal settling, but I'm holding my breath until payout.  this was my biggest RS deal with $50K invested.  I'm not sure how much stock I put in the provided spreadsheet indicating a 6.2% return though.  I haven't gotten payment on this one since December, and as each month passes unpaid, any calculated ROI dwindles.  I can only hope this deal closes completely this month but i'm not counting on it.  Just the same I will be happy just to come out even at this point.  I didn't realize there were so many deals sponsored by Franchise growth, there doesn't seem to be a lot of confidence on this thread about them, are they defaulting on everything?  I have another deal with them that I haven't seen mentioned here yet, "Long Island American family Care"  that one too is a couple months deliquent, but I do at least know it has been successfully built and is operating.  Any one else in on that one?

ramesh

I wrote to RS earlier today inquiring about the status of the Church's Chicken, Westminster CO deal -- a Franchise Growth loan -- and received the following response. 

We have been actively pursuing the borrower and have a call scheduled with their senior management in the next few days. We will report back to investors after that call with any meaningful information that we receive. While our ultimate remedy when a loan is in default is to pursue foreclosure, we believe that working towards a settlement with the borrower is likely to result in a higher recovery for investors.

I had asked for details about how much of the loan had been disbursed considering construction has been greatly delayed, but I guess this was all they would tell me. Oh well.

Sdb

Franchise Growth has always been current for the deals I am in but it appears that there might be a problem given the latest correspondence from RS concerning the Church's Deland, Fl deal. Not sure what is going on, Goalz still shows it as "coming soon". Not had a payment since January, but figured it was due to slow RS.

finmaster

I just got this from RS. Does the BK affect Louisville MSA property too?

Louisville MSA Captain D's Tranche 2 - 03/06/2019
03/07/2019
We have been actively pursuing the borrower and have a call scheduled with their senior management in the next few days. We will report back to investors after that call with any meaningful information that we receive. While our ultimate remedy when a loan is in default is to pursue foreclosure, we believe that working towards a settlement with the borrower is likely to result in a higher recovery for investors.

kt1984

I have 3 investments, unfortunately, all of them being with Franchise Growth LLC. The Taylor MI one has reached a resolution and looks like we will break even although I will breathe a sigh of relief only once I see the money back in the bank ! The Long Island Family care is atleast operating and has good reviews, so I am hoping it will pay off. The Captain D in KY is the most recent update since I did not receive the last 2 interest payments- it still says as coming soon on the Goalz website, although I doubt that is accurate. I really hope I can break even in all these deals with a minor +/-. I am just surprised that Franchise growth is running into problems with every single deal which tells me there is something fundamentally wrong with their business model.

ramesh

Here is another bizarre and troubling notification I received this morning.

Camden South Carolina Multifamily Portfolio
The borrower claims that they are current on payments and we have asked for proof of payment. We will update you when we have been able to confirm. The borrower has further agreed to make a payment if he is indeed delinquent.


Huh?

I take responsibility for not having done due diligence on this borrower.  I guess I just got carried away by RS' self-description of its underwriting funnel and quality.  As is becoming clear now, under the watch of their ex-CEOs Nav Athwal and Ed Forst, and their VC overlords, RS has gotten in bed with and endorsed some truly bad actors  (witness Athwal's gushing Forbes article about Alliance Capital's Massimino, the sponsor of so many problematic deals at RS) and has had some truly horrific underwriting quality. 

Even though I am disappointed with the way RS has been handling the situation post-Nov 2018,  I have sympathy for the current CEO.  Sure, he has been instrumental in creating this monumental mess, but he is attempting to make things right by us.  Forst and Athwal have disappeared from the scene, and at least one of them (Athwal) is busy blogging about how startups should be built, and possibly planning his next venture.  Sigh!


REI

Hello, has anyone tried contacting Realty Shares today. I tried sending them an email to both contact@realtyshares.com and support@realtyshares.com, and both bounced back!! This is highly concerning given that we were no longer able to call them and now no email contact as well! If any of you have an alternative email id/contact # for them I would be grateful if you can post it here. Thanks.

sdnerd

Quote from: Beat_The_Fraud on March 07, 2019, 09:35:21 AM
Quote from: REI on March 07, 2019, 08:26:20 AM
Hello, has anyone tried contacting Realty Shares today. I tried sending them an email to both contact@realtyshares.com and support@realtyshares.com, and both bounced back!! This is highly concerning given that we were no longer able to call them and now no email contact as well! If any of you have an alternative email id/contact # for them I would be grateful if you can post it here. Thanks.

Yes, their emails have started to bounce back since this morning. I heard from one of the sources who worked previously with RS, they have bought enough time to escape and may have wrapped up their operations, so I am dreading we may never hear back from them anymore :(

Seems unlikely based on all the recent portal updates and distributions.

They all but stopped responding to emails months ago regardless. IMHO what they should have done back then was have an auto-response to all emails with a high level update saying information would be distributed via regular investor updates, and individual deal updates would continue via the dashboard as they occurred - and that no individual responses to emails would occur. Then they should have sent out bi-weekly or at least monthly high level updates w/ again high level updates as to operational changes, tax information, etc. The basics. It would probably take 5 minutes to put together the communication each month.

Would it please everyone? No. But it'd be a whole lot better than a black hole of communication, bounced emails, and forum threads like this where people are having to play inspector gadget just to piece together some basic information. It would at least give the impression that everyone's best interests are actively being addressed, the lights are still on, and at least some semblance of leadership is still at the helm.

Perhaps the path they are on is at the advisement of their legal department. I'd hate to guess how many people have lawyered up at this point.