Thoughts On RealtyShares Closing Its Doors To New Investors

[groovydude]

Nice, I've requested to join.

Like barnold, I'm wondering how I've achieved 2 smites on this forum already. My guess is that we have some affiliates from RS/FG lurking.
[/quote]

JD - Haha, it's a badge of honor! I hadn't even noticed this feature of the forum until you pointed it out. I have 15 "smites"! Let's all start doling out positive "applauds" and put those smiters in their place! Seriously though, I don't care if RS sympathizers are lurking and smiting us muckrakers, but their posts are distracting and deflecting. Fortunatley I've only really seen a few.

Groovy

[JD]

Nice, I've requested to join.

Like barnold, I'm wondering how I've achieved 2 smites on this forum already. My guess is that we have some affiliates from RS/FG lurking.

JD - Haha, it's a badge of honor! I hadn't even noticed this feature of the forum until you pointed it out. I have 15 "smites"! Let's all start doling out positive "applauds" and put those smiters in their place! Seriously though, I don't care if RS sympathizers are lurking and smiting us muckrakers, but their posts are distracting and deflecting. Fortunatley I've only really seen a few.

Groovy
[/quote]

Love it! I am applauding even more liberally now 😎

[Ventan]

FYI -  I came across this private FB group while doing some research.  Some of you may want to join.  It's protected, so RS cannot listen to our plans and conversations.  Here is the link https://www.facebook.com/groups/362978171187445/?fref=nf

Thanks I have requested to join.

[Ventan]

Chicago Retail Portfolio – Lockport, IL - 2nd Lien – Tranche 2 – Asset Update (7/26/19)
07/26/2019
IIRR Management Services, LLC (IRM) has taken over the asset management and fund administration functions of this investment. Our goal is to provide timely and accurate updates on each asset.

According to our findings, this asset is currently not performing according to the original business plan. The borrower is responsive to our communications but declared bankruptcy and is unable to provide financial support for the deal. This deal has been identified as a Tier 3 asset.

Since the last update, the foreclosure process was unable to proceed because the property is tied up in the bankruptcy estate. The is negative event for our second lien position since it increases the amount owed to the first lender by allowing the first lender to charge legal fees and default interest to increase. IRM believes that investors will suffer a substantial to total loss on their investment. The borrower has an investor who offered $100,000 to purchase this mortgage and another RealtyShares 2nd mortgage. IRM is analyzing this proposal. IRM hired local counsel to assist collection efforts and will continue to monitor the proceedings and take action that is in the best interests of our investors.


This is the latest update I received on this investment. I have invested in Clubcreek Apartments and Penbrook Apartments in Austin Texas and the k1 are showing losses and the ddistributionsare negligible. please let me know if anyone has any update on the above deals.

Thank you




Please continue to monitor the Investor Dashboard for updates and be sure to keep your bank account information up-to-date in order for our fund administrators to process payments accurately and avoid any delays or missed payments.

*Disclaimer: All of the information above is presented on an as-is basis, as provided to our team members, and have not been independently verified by IRM.

IRM Asset Management Team

I'm in this one too. As the matter of fact, I've got 2 Chicago Retail deals and they both got this type of message last week.

It's definitely on my potential lawsuit list.

Thanks..it  sure sounds fishy with so many deals nonperforming. I hope the complaints are taken seriously and investigated.

[Nosferatu_FL]

I agree with @magpie.  It is so important for everyone who lost money here to file a complaint with the SEC:

https://acadia.sec.gov/TcrWeb/faces/pages/accept.jspx?_afrLoop=3634704279935698&_afrWindowMode=0&_afrWindowId=null#!%40%40%3F_afrWindowId%3Dnull%26_afrLoop%3D3634704279935698%26_afrWindowMode%3D0%26_adf.ctrl-state%3D1b3phk460p_4

And also with the California Department of Business Oversight:

https://docqnet.dbo.ca.gov/complaint/

Filed today!

You do not need to write an elaborate complaint.  What is important is that these regulators see how many people fell victim to RealtyShares' negligence and, in some cases, Sponsors' outright fraud.

10 MINUTES OF YOUR TIME CAN MAKE A DIFFERENCE.

[Nosferatu_FL]

Re-posting this from Last week.  I heard from a bunch of people and keeping contact info for FU Call with lawyer.
The plan is to see how IRM handles the FG deals and then decide how to proceed, but at least explore pursuing legal action there if we don't get satisfactory answers.

Please contact me if you are on Best Western Toledo Deal!!

This was my Post last week:

"Anyone involved in the BEST WESTERN Toledo  or Prescott woads deals?
Please contact me if you were As I'm looking at legal option.  Both these investments seem to be complete losses.

I contacted a lawyer today and he TOLD me there's case for class action lawsuit after reviewing the documents.
I'm looking to proceed with legal action on this directly against the sponsors and possibly against RS.
Best western link: https://www.realtyshares.com/investments/best-western-toledo
Prescott woods link: https://www.realtyshares.com/investments/prescott-woods-qp

I don't have much experience dealing with lawyers in this type of litigation, but he seemed willing to do most of this on contingency basis.
I also asked him about the FG deals and he said the same thing that there's a case for Class action lawsuit.
We are waiting to see what happens with their negotiations with IRM, but I suggest that those who are interested in possibly pursuing legal if things don't go as planned, contact me as well so we have a plan B.

feel free to write me at this email: kss007@yahoo.com  and will try to coordinate another Call with the same Lawyer
to look at our legal options."

[Hindsight2020]

I know everyone is very focused on payment status. I received several payments for RS investments today. Check your personal accounts for activity.

I have 10 RS investments left. 3 are in default (2 FG and 1 BlueMountain/Utah). 1 is common equity that makes quarterly payments at the sponsor's discretion. 1 accrues interest. The remaining 5 are preferred equity and pay monthly, and after the payments this AM I have received payments from all 5 in July.

[dwengca]

I received a payment from RS in my bank account today, in the amount of $1499.56.   Don't know what it is for as there are no updates on my RS account page.   

[magpie]

Did anyone else feel as though IRM threatened investors in the FG update that just went out?  So, IRM doesn't want us talking online or pursuing legal action. What a load of cr*p!  IRM you are supposed to work for us! You better take legal action against FG and ADP or you will be sued by us.  Don't threaten your customers!

[sdnerd]

Read their update email.

I'm somewhat annoyed that we have yet to receive a more detailed breakdown of each property. Latest actual status - as well as last appraised value. These deals appear to be all over the place from what tidbits I gathered from the webinar.

For example the Detroid Dog Haus. This one was supposed to have a sale, which would have had everyone walk away with basically the vast majority of their principal returned once you factored in the distributions. Then it got delayed as the money had to come from South America, etc. Would the numbers still work out to be the same if option (1/Settle) is chosen? Or would it still be facing a 25-75% loss per their email? 4M loan, 2M already returned and the last appraisal on the land was $990,000 on July 25, 2017. Maybe that one would now be a ~25% loss?

My .02 on their 3 options:

1. Devil in the details. The ADP speculative note is garbage IMHO. Will never get a dollar there. Take that 25% from any future proceeds FG gets and I'm more interested. If I'm looking at a 25% loss across the board - I think I would be fine just ending this misery. Once we start talking 50-75% loss... I prefer option 2.

2. FG got everyone into this mess, getting them completely out of the picture is appealing. If we're looking at 50-75% losses; I'd prefer it take a bit longer to try and recoup as much as possible. If it takes a few months longer, so be it at this point.

3. We are talking 75% losses on 1st position debt deals, all the shenanigans that have been discovered thus far, all the lack of disclosures and conflicts of interest, apparent gross negligence, etc... unless the retained legal counsel has valid reasons to avoid this it seems like legal action should be pursued against FG.

Net: Option 3 I think should 100% be pursued sans strong legal council against it in addition to option 1 or 2... and my preference between those two really depends on where the numbers land on that 25-75% loss range.

From some of the other discussions, it appears some folks are preparing option 4 as well - legal action against FG and/or IRM.

Best of luck to all.

[stingray]

@magpie:  I am not in the FG deals but was bothered about the message you received suggesting that IRM "doesn't want us talking online or pursuing legal action".  Ha ha ha.  Would you be kind enough to reproduce their message here?

[ramesh]

Being a relatively inexperienced investor in real estate deals, I apologize in advance for a naive question about the numbers showing on one of my K-1s: RS 368 University of Toledo Student Housing.  This sponsor hasn't ever furnished detailed income statements, but their one-pager updates have generally been upbeat, and they have made fairly regular distributions.  The K-1 shows a near 40% hit to capital by way of "rental loss".  I will ask my tax accountant to dig into the specifics -- though I am at a loss to find any specifics to dig in to here.  If anyone else here is in on this deal, or has insights into situations like this from prior experience, I would appreciate your thoughts:  is this a "real" loss, or is this some kind of tax gaming that is commonplace in real estate K-1s?

[babets]

Did anyone else feel as though IRM threatened investors in the FG update that just went out?  So, IRM doesn't want us talking online or pursuing legal action. What a load of cr*p!  IRM you are supposed to work for us! You better take legal action against FG and ADP or you will be sued by us.  Don't threaten your customers!

Guys...investors are not supposed to speak directly with the sponsors. So IRM is correct in saying that many of the threats that some of the investor did directly to FG are not a smart move...the contract we all signed is between us and RS at the time and sponsor have no rights to speak to investor and viceversa.
I personally have 3 investment with FG but I am not too concerns because I feel that IRS is managing the situation to the best of their abilities and has all the interest, together with the sponsor, to regain the most money out of the deal.
I am also not concern because I read carefully the statement we ALL signed which was clearly mentioning that these investments are potentially 100% at risk of losing the entire capital. Not only that but when I was in the process of investing with RS (8 investments total) the person dialoguing with me at the time was VERY clear in informing me that these were high risks investments and should be treated as such.
So, as much as I would hate it to lose a penny, I believe this is part of the game and I also dedicated a small % of my NW to this.
By reading some of the comments and posts here I believe people were a little less prudent and went in full blast and now are concerned.
If you did that, you did not informed yourself correctly, sorry, nor did enough research on crowdfunding so some self blame is fair here...
good luck to all

[FloridaMan]

1. It is certainly true that as LPs, our contractual arrangement is with RS, and not directly with a sponsor.

2. It is also true that we are all private citizens. The GPs are all private companies. Anyone citizen can speak to anyone they desire to talk to. And in these circumstances — where it is at best unclear what RS is doing with sponsor communication — I don't see any reason why direct interaction shouldn't happen.

3. Finally, I agree with your point on legal action by LPs. Where there's nothing to recover, there's nothing to recover.

Did anyone else feel as though IRM threatened investors in the FG update that just went out?  So, IRM doesn't want us talking online or pursuing legal action. What a load of cr*p!  IRM you are supposed to work for us! You better take legal action against FG and ADP or you will be sued by us.  Don't threaten your customers!

Guys...investors are not supposed to speak directly with the sponsors. So IRM is correct in saying that many of the threats that some of the investor did directly to FG are not a smart move...the contract we all signed is between us and RS at the time and sponsor have no rights to speak to investor and viceversa.
I personally have 3 investment with FG but I am not too concerns because I feel that IRS is managing the situation to the best of their abilities and has all the interest, together with the sponsor, to regain the most money out of the deal.
I am also not concern because I read carefully the statement we ALL signed which was clearly mentioning that these investments are potentially 100% at risk of losing the entire capital. Not only that but when I was in the process of investing with RS (8 investments total) the person dialoguing with me at the time was VERY clear in informing me that these were high risks investments and should be treated as such.
So, as much as I would hate it to lose a penny, I believe this is part of the game and I also dedicated a small % of my NW to this.
By reading some of the comments and posts here I believe people were a little less prudent and went in full blast and now are concerned.
If you did that, you did not informed yourself correctly, sorry, nor did enough research on crowdfunding so some self blame is fair here...
good luck to all

[magpie]

@magpie:  I am not in the FG deals but was bothered about the message you received suggesting that IRM "doesn't want us talking online or pursuing legal action".  Ha ha ha.  Would you be kind enough to reproduce their message here?

IRM strongly advises against reaching out to Franchise Growth with threats of bodily harm, stalking, defamation on public internet forums or misstatements about FBI involvement. These actions are counter productive, possibly illegal, and IRM denounces any such action. IRM reserves the right to refuse representation to anyone involved in such actions.

[magpie]

Did anyone else feel as though IRM threatened investors in the FG update that just went out?  So, IRM doesn't want us talking online or pursuing legal action. What a load of cr*p!  IRM you are supposed to work for us! You better take legal action against FG and ADP or you will be sued by us.  Don't threaten your customers!

Guys...investors are not supposed to speak directly with the sponsors. So IRM is correct in saying that many of the threats that some of the investor did directly to FG are not a smart move...the contract we all signed is between us and RS at the time and sponsor have no rights to speak to investor and viceversa.
I personally have 3 investment with FG but I am not too concerns because I feel that IRS is managing the situation to the best of their abilities and has all the interest, together with the sponsor, to regain the most money out of the deal.
I am also not concern because I read carefully the statement we ALL signed which was clearly mentioning that these investments are potentially 100% at risk of losing the entire capital. Not only that but when I was in the process of investing with RS (8 investments total) the person dialoguing with me at the time was VERY clear in informing me that these were high risks investments and should be treated as such.
So, as much as I would hate it to lose a penny, I believe this is part of the game and I also dedicated a small % of my NW to this.
By reading some of the comments and posts here I believe people were a little less prudent and went in full blast and now are concerned.
If you did that, you did not informed yourself correctly, sorry, nor did enough research on crowdfunding so some self blame is fair here...
good luck to all

You clearly work for IRM, RS or FG.  Without the folks here doing research, we would know nothing and we never signed away our freedom of speech.  We have the right to discuss online.   We also didn't sign anything that said we are ok with fraud. We didn't sign anything that said it's ok to leave out pertinent information like outsourcing your entire operation to ADP. We didn't sign anything that approved wire fraud.  I want these suckers in jail and would rather lose every penny then let them get away with it and settle.  IRM - do the right thing, not the easy thing!

Looking forward to your smites!

[dwengca]

   
292 Corning Drive...a debt deal.   Got my principle payment today and it resulted in 25% loss.    I can't believe the new management decided to sell it back to the original borrower at 75% of the orignal loan value.   This basically means..

original borrower don't pay his/her payments
drag it on...
and now buy it back at 75%... 

If he/she could buy it back at 75%, whey can't they pay regular payments...    This is total BS.     

[babets]

Did anyone else feel as though IRM threatened investors in the FG update that just went out?  So, IRM doesn't want us talking online or pursuing legal action. What a load of cr*p!  IRM you are supposed to work for us! You better take legal action against FG and ADP or you will be sued by us.  Don't threaten your customers!

Guys...investors are not supposed to speak directly with the sponsors. So IRM is correct in saying that many of the threats that some of the investor did directly to FG are not a smart move...the contract we all signed is between us and RS at the time and sponsor have no rights to speak to investor and viceversa.
I personally have 3 investment with FG but I am not too concerns because I feel that IRS is managing the situation to the best of their abilities and has all the interest, together with the sponsor, to regain the most money out of the deal.
I am also not concern because I read carefully the statement we ALL signed which was clearly mentioning that these investments are potentially 100% at risk of losing the entire capital. Not only that but when I was in the process of investing with RS (8 investments total) the person dialoguing with me at the time was VERY clear in informing me that these were high risks investments and should be treated as such.
So, as much as I would hate it to lose a penny, I believe this is part of the game and I also dedicated a small % of my NW to this.
By reading some of the comments and posts here I believe people were a little less prudent and went in full blast and now are concerned.
If you did that, you did not informed yourself correctly, sorry, nor did enough research on crowdfunding so some self blame is fair here...
good luck to all

You clearly work for IRM, RS or FG.  Without the folks here doing research, we would know nothing and we never signed away our freedom of speech.  We have the right to discuss online.   We also didn't sign anything that said we are ok with fraud. We didn't sign anything that said it's ok to leave out pertinent information like outsourcing your entire operation to ADP. We didn't sign anything that approved wire fraud.  I want these suckers in jail and would rather lose every penny then let them get away with it and settle.  IRM - do the right thing, not the easy thing!

Looking forward to your smites!

LOL, no i dont work for them.
I contacted one sponsor directly once and the sponsor told me we should not be speaking directly.
I have not read entirely the documents i signed so might be written there that direct contact is not allowed not sure. I agree with you that we did not signed up for fraud but RS did not do any fraud and again, we signed a contract that mentioned the entire capital was at risk which is the mindset I have chosen when I decided to participate in it.
With this said, you are correct in being upset. Just also lets all be realistic.

[sdnerd]

Did anyone else feel as though IRM threatened investors in the FG update that just went out?  So, IRM doesn't want us talking online or pursuing legal action. What a load of cr*p!  IRM you are supposed to work for us! You better take legal action against FG and ADP or you will be sued by us.  Don't threaten your customers!

Guys...investors are not supposed to speak directly with the sponsors. So IRM is correct in saying that many of the threats that some of the investor did directly to FG are not a smart move...the contract we all signed is between us and RS at the time and sponsor have no rights to speak to investor and viceversa.
I personally have 3 investment with FG but I am not too concerns because I feel that IRS is managing the situation to the best of their abilities and has all the interest, together with the sponsor, to regain the most money out of the deal.
I am also not concern because I read carefully the statement we ALL signed which was clearly mentioning that these investments are potentially 100% at risk of losing the entire capital. Not only that but when I was in the process of investing with RS (8 investments total) the person dialoguing with me at the time was VERY clear in informing me that these were high risks investments and should be treated as such.
So, as much as I would hate it to lose a penny, I believe this is part of the game and I also dedicated a small % of my NW to this.
By reading some of the comments and posts here I believe people were a little less prudent and went in full blast and now are concerned.
If you did that, you did not informed yourself correctly, sorry, nor did enough research on crowdfunding so some self blame is fair here...
good luck to all

I certainly don't condone any threats of violence or whatever shenanigans people have been potentially aimed at FG. And I do agree from some of the posts some people really went in hard from... uneducated positions (ie: some of the big $ 2nd lien position posts I've read... scary).

That said, it's pretty hard to have a 100% loss on senior debt deal when a large portion of the value is the land itself. The sheer number of FG deals that are a complete disaster; the lack of disclosures; the huge gaps in communication from FG to RS; the apparent hiding of the ADP facts from RS; the discovered conflicts of interest; the discovery that they really had virtually no track record and outsourced everything; the signs that funds from multiple deals got mingled; etc.

You know the old saying where there is smoke there is often fire?

I had other RS investments in fast food restaurants that went mostly without a hitch, including other Captain D's locations. Yet, every single FS deal is a complete train wreck.

They clearly didn't know what they were doing, were in on it, were taken for a complete ride, or [insert whatever reasoning they may have] - at the end of the day they took millions of dollars of investments from a lot of folks and completely screwed it up. As such, they should not expect people to just roll over and take 25-75% losses while finger waiving the blame at a 3rd party they contracted and didn't do any due diligence or bare minimum follow-up on.

The failure of all these deals sits entirely, 100%, on them. The circumstances behind the failures, sure seems to have a lot of smoke behind them... investors feeling legal action is necessary IMHO is completely warranted.

Best of luck to all.


   

[barnold24]

And now we are getting multiple K-1's on Realtyshares Investments.