Author Topic: Thoughts On RealtyShares Closing Its Doors To New Investors  (Read 337555 times)

Hindsight2020

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1040 on: September 17, 2019, 12:24:22 PM »
Since there's so much negative information on here, allow me to add a positive. 1575 Grant Road paid off in full (the original preferred equity amount plus the accrued preferred return), and I received the proceeds in my bank account today. 1575 Grant Road was a single-family remodel that went into payment default in June. IRM worked with them to give them breathing room to re-finance the project, and it paid off.

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1041 on: September 17, 2019, 12:44:45 PM »
Since there's so much negative information on here, allow me to add a positive. 1575 Grant Road paid off in full (the original preferred equity amount plus the accrued preferred return), and I received the proceeds in my bank account today. 1575 Grant Road was a single-family remodel that went into payment default in June. IRM worked with them to give them breathing room to re-finance the project, and it paid off.

That is great to hear, thanks for sharing.

On a similar note, has anyone in Chantilly Road (babets) or River's Edge (DigitalNomad) received their principal back yet? I received an interest payment for Chantilly yesterday but no principal yet, which seems odd.

DigitalNomad

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1042 on: September 17, 2019, 04:23:42 PM »
Since there's so much negative information on here, allow me to add a positive. 1575 Grant Road paid off in full (the original preferred equity amount plus the accrued preferred return), and I received the proceeds in my bank account today. 1575 Grant Road was a single-family remodel that went into payment default in June. IRM worked with them to give them breathing room to re-finance the project, and it paid off.

That is great to hear, thanks for sharing.

On a similar note, has anyone in Chantilly Road (babets) or River's Edge (DigitalNomad) received their principal back yet? I received an interest payment for Chantilly yesterday but no principal yet, which seems odd.

No I haven't received my principal yet.

rs_thoughts

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1043 on: September 17, 2019, 04:29:29 PM »
hi ramesh

i know you pointed to that portion of text where they would hold the first lien rights. But their final statement about sending to a "debt collection agency" almost implies they have categorized the missing principal as just some liability on un-secured credit. Otherwise, why send it to a collection agency? Just exercise your right on the property and hold them to the fire. nothing is really clear.

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1044 on: September 18, 2019, 04:46:47 AM »
Since there's so much negative information on here, allow me to add a positive. 1575 Grant Road paid off in full (the original preferred equity amount plus the accrued preferred return), and I received the proceeds in my bank account today. 1575 Grant Road was a single-family remodel that went into payment default in June. IRM worked with them to give them breathing room to re-finance the project, and it paid off.

That is great to hear, thanks for sharing.

On a similar note, has anyone in Chantilly Road (babets) or River's Edge (DigitalNomad) received their principal back yet? I received an interest payment for Chantilly yesterday but no principal yet, which seems odd.

No I haven't received my principal yet.

Thanks.

Their 15-20 business day timeline is rather dubious if they are saying it was paid off on 08-09 but maybe they mean 15-20 from the notification date.

babets

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1045 on: September 18, 2019, 06:32:48 AM »
Since there's so much negative information on here, allow me to add a positive. 1575 Grant Road paid off in full (the original preferred equity amount plus the accrued preferred return), and I received the proceeds in my bank account today. 1575 Grant Road was a single-family remodel that went into payment default in June. IRM worked with them to give them breathing room to re-finance the project, and it paid off.

That is great to hear, thanks for sharing.

On a similar note, has anyone in Chantilly Road (babets) or River's Edge (DigitalNomad) received their principal back yet? I received an interest payment for Chantilly yesterday but no principal yet, which seems odd.

no I havent received the principal back yet. To note, we should receive principal plus accrual of 4,5% yearly so more than just the principal. In the memo sent however they mentioned it takes 15/20 days to receive it so we should wait another couple of weeks. I think it is because is not a regular distribution.

However one weird thing happened to me. one of my payment marked as "failed" (not chantilly rd). when I contacted RS about it they made me set up again my bank details (which have not changed). so be on alert if you see a payment marked as failed you need to contact them and reset your bank details even if they have not changed. I guess is a glitch but wanted to let everyone know.

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1046 on: September 18, 2019, 06:58:11 AM »
Since there's so much negative information on here, allow me to add a positive. 1575 Grant Road paid off in full (the original preferred equity amount plus the accrued preferred return), and I received the proceeds in my bank account today. 1575 Grant Road was a single-family remodel that went into payment default in June. IRM worked with them to give them breathing room to re-finance the project, and it paid off.

That is great to hear, thanks for sharing.

On a similar note, has anyone in Chantilly Road (babets) or River's Edge (DigitalNomad) received their principal back yet? I received an interest payment for Chantilly yesterday but no principal yet, which seems odd.

no I havent received the principal back yet. To note, we should receive principal plus accrual of 4,5% yearly so more than just the principal. In the memo sent however they mentioned it takes 15/20 days to receive it so we should wait another couple of weeks. I think it is because is not a regular distribution.

However one weird thing happened to me. one of my payment marked as "failed" (not chantilly rd). when I contacted RS about it they made me set up again my bank details (which have not changed). so be on alert if you see a payment marked as failed you need to contact them and reset your bank details even if they have not changed. I guess is a glitch but wanted to let everyone know.

That is good to be aware of the failed payment and good point on the 4.5% accrual. I was wondering if something like the bank account instructions for me had done something similar but sounds like I should be okay.

andyo

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1047 on: September 20, 2019, 08:18:50 AM »
Is anyone else in RS261 - 12 Inner Loop Townhomes? I actually received a couple of monthly payments today from July and August - which is interesting considering that I haven't received April through June...

dwengca

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1048 on: September 20, 2019, 02:59:50 PM »
I have not receive a single payment this month, and last month was less than usual.  $150k in and nothing.. I honestly don't see much improvement myself.

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1049 on: September 21, 2019, 02:09:37 AM »
I have not receive a single payment this month, and last month was less than usual.  $150k in and nothing.. I honestly don't see much improvement myself.

I'm seeing a real drop off this month too, which is quite concerning.

Last month was a down month as well; I received about 60-70% of what I expect. But this month is abysmal so far, about 15% of expectations in a few tiny payments.

I'm wondering if they are messing around with their payment processor/schedule. If things don't come storming through this upcoming week, I'll certainly be contacting them.

stingray

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1050 on: September 21, 2019, 04:41:47 AM »
@JD and @dwengca:

Here is a possible explanation.  I recently spoke with a sponsor I know after RS had still not provided us a Q2 payment or report.  They informed me that they had sent the payment and report to RS months earlier.  They even told me the exact date that RS cashed the check.  The sponsor contacted RS, and only then did RS post an update to investors.  It said that RS had been owed commissions in arrears and deducted them from the Q2 payment; this left no funds to distribute to investors.  So, if it's true with this investment, it could very well be a systemic problem that affects your investments too.

What bothers me is that they don't provide a statement of account to substantiate this, or don't voluntarily write to say that we won't receive a payment.

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1051 on: September 21, 2019, 07:27:46 AM »
@JD and @dwengca:

Here is a possible explanation.  I recently spoke with a sponsor I know after RS had still not provided us a Q2 payment or report.  They informed me that they had sent the payment and report to RS months earlier.  They even told me the exact date that RS cashed the check.  The sponsor contacted RS, and only then did RS post an update to investors.  It said that RS had been owed commissions in arrears and deducted them from the Q2 payment; this left no funds to distribute to investors.  So, if it's true with this investment, it could very well be a systemic problem that affects your investments too.

What bothers me is that they don't provide a statement of account to substantiate this, or don't voluntarily write to say that we won't receive a payment.

That's a good point as I've recently discovered it myself.

I had contacted about one holding that hadn't paid out since January even though it was supposedly current according to my dashboard. RS/IRM got back to me the same day with the explanation you gave, so it made sense in this case.

Unfortunately, I have ~20 active RS deals at the moment. Fortunately, many of them are classified as Tier 1 assets now. So the fact that only 2 of them have distributed to me so far this month is very very fishy.

ramesh

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1052 on: September 21, 2019, 08:29:17 AM »
Just to add to the sample size here, I too have received close to none of the distributions this month.  To add some evidence to stingray's theory, the one payment I did receive was 15% of a distribution that has been regular to date.  Indeed, if IRM has a policy of deducting their fees around this time of the year, I guess one might expect this to happen.  Greater communication would be good, but responses to mails sent to Eric Sullivan are noticeably more informative and timely than those during the RS era post their bust.

BTW, some responses to my queries to Sullivan about a couple deals for the benefit of those who are in these.

1. The Wytheville VA Captain D's debt deal returned close to 95% of the principal, and per your notification of Aug 5 they are delinquent on the rest of the payment. 

An update on this situation has been sent out today. Please refer to your dashboard.

2.  I am pleased to receive updates indicating your assessment of the quality of the current investments.  NJ Multifamily Fund 2 had been classified as a Tier 2, and you were looking into their books to get a better sense.  Anxiously looking forward to hearing your conclusions. 

This is a pending matter.

3.  Would also appreciate receiving such assessments for the remaining investments, in particular, University of Toledo Stiudent Housing and Hampton Inn Colliersville, TN.

Toledo Student Housing - This investment is considered a Tier 1 investment

Hampton Inn Colliersville, TN - This investment is considered a Tier 1 investment

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1053 on: September 21, 2019, 12:34:22 PM »
Thanks Ramesh - definitely good to get as many experiences as possible reported here 🙂

cfojim

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1054 on: September 22, 2019, 02:51:02 PM »
RS176 has an amended K-1 dated 9/19/19, which shows the income missing on the original version.  No notification of this amendment has been posted yet. 

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1055 on: September 23, 2019, 04:55:47 AM »
Chantilly principal + accrual just posted, along with 2 smallish monthly distributions.

Definitely encouraging but still a long way to go to make up the gap in total monthly distributions.

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1056 on: September 23, 2019, 06:43:01 AM »
Hi Folks,

I spoke to the CEO of IRM (Iintoo RREAF Management) the other day and here are some bullet points:

* IRM was created specifically to be the management company for the remaining RS portfolio of deals. IRM was hired by RS.

* There were about ~255 deals they were managing several months ago, and now there are about ~225 today.

* Their goal is to wind everything down within 24 months, but obviously nothing is concrete.

* They did notice some sponsors try to take advantage of RS shutting down (RS is still technically alive, but owe money to creditors) to not follow the terms of their contracts. But IRM has been diligent in tracking down these bad sponsors and making them follow through on the respective agreements. They have lawyers and a team.

* They have a guy w/ 20+ years of experience managing the DME fund (17 deals).

* Believes DME fund will show a positive IRR and be wound down in about 24 months as well.

* IRM will fully take over the RS portfolio fully come Jan 1, 2020. I asked what's the difference between what they are doing now and Jan 1, 2020. He said some minor stuff that still needs to be finalized, but we investors shouldn't notice the difference. For all intents and purpose, IRM is managing the remaining portfolio.

Overall, I came away from the call feeling good that IRM is doing the best it can to actively manage the remaining deals to completion in the best interest of investors. Iintoo has been around for ~4 years and RREAF has been around for decades.

There are obviously going to be bad deals and bad sponsors, which will negatively hurt investors. For example, I tried contacting Taylor Fitzpatrick (http://www.taylorfitzpatrick.com/), the Sponsor who is going to lose me and other investors in the deal 80% - 90% on the Arizona Student Housing deal.... but no response. Their main contact info doesn't work. If anybody has any ideas, let me know.

It feels like IRM is highly motivated to manage the portfolio as well as possible because they earn fees and want to bring new investors onto the Iintoo platform. If they screw up the management process, they'll have a harder time getting existing investors. Fingers crossed for the next 24 months.

Regards,

Sam
« Last Edit: September 23, 2019, 06:45:49 AM by Sam »
Regards,

Sam

JD

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1057 on: September 23, 2019, 07:09:14 AM »
Hi Folks,

I spoke to the CEO of IRM (Iintoo RREAF Management) the other day and here are some bullet points:

* IRM was created specifically to be the management company for the remaining RS portfolio of deals. IRM was hired by RS.

* There were about ~255 deals they were managing several months ago, and now there are about ~225 today.

* Their goal is to wind everything down within 24 months, but obviously nothing is concrete.

* They did notice some sponsors try to take advantage of RS shutting down (RS is still technically alive, but owe money to creditors) to not follow the terms of their contracts. But IRM has been diligent in tracking down these bad sponsors and making them follow through on the respective agreements. They have lawyers and a team.

* They have a guy w/ 20+ years of experience managing the DME fund (17 deals).

* Believes DME fund will show a positive IRR and be wound down in about 24 months as well.

* IRM will fully take over the RS portfolio fully come Jan 1, 2020. I asked what's the difference between what they are doing now and Jan 1, 2020. He said some minor stuff that still needs to be finalized, but we investors shouldn't notice the difference. For all intents and purpose, IRM is managing the remaining portfolio.

Overall, I came away from the call feeling good that IRM is doing the best it can to actively manage the remaining deals to completion in the best interest of investors. Iintoo has been around for ~4 years and RREAF has been around for decades.

There are obviously going to be bad deals and bad sponsors, which will negatively hurt investors. For example, I tried contacting Taylor Fitzpatrick (http://www.taylorfitzpatrick.com/), the Sponsor who is going to lose me and other investors in the deal 80% - 90% on the Arizona Student Housing deal.... but no response. Their main contact info doesn't work. If anybody has any ideas, let me know.

It feels like IRM is highly motivated to manage the portfolio as well as possible because they earn fees and want to bring new investors onto the Iintoo platform. If they screw up the management process, they'll have a harder time getting existing investors. Fingers crossed for the next 24 months.

Regards,

Sam

Thanks Sam - it's nice to have a high-level communication and summary like this.

The 24 month wind-down sounds great but I do wonder how they'll achieve that with the handful of deals that are slated to take 5-7 years and only closed in 2018 (I've got 2 set for exit in 2023 and 1 in 2025). Maybe they'll work on getting those sponsors to refi.

Sorry about your ASU deal; I always thought the student housing offers on RS were some of the better ones all around. I don't know what other recourse there would be short of foreclosure/liens.

stingray

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1058 on: September 23, 2019, 09:03:11 AM »
@Sam--I used SEC filings to track down your man Jason Taylor (of Taylor Fitzpatrick).  His phone # is 480-283-7798.  He is answering it.

sdnerd

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #1059 on: September 24, 2019, 08:34:53 AM »
A bizarre situation with one of my debt investments -- Wytheville, VA Captain D's.  The sponsor paid off 95% of the principal, and despite repeated notices from IRM refuses to make us whole!  Here is the notification from IRM.

Quote
For the investment numbered: RSL.2017A.148 and identified as East Commonwealth Drive - Captain D's (Wytheville, VA), IRM has determined that RealtyShares has made a common clerical error as described in a letter to the Sponsor below:

"On May 13, 2019 RealtyShares Inc. sent you a payoff letter for East Commonwealth Drive - Captain D's (Wytheville, VA) – RSL.2017A.148 – for a payoff on May 16, 2019. That letter included a $66,887.34 credit for funds remaining in the Rehab Reserve and a credit for $4,736.33 in the Interest Reserve. The total credit was $71,623.67. RealtyShares received the funds for the payoff of the loan on May 16, 2019. Once the payoff funds were received, RealtyShares’ fund administrator began the reconciliation process and on July 3rd, 2019, reported that the payoff was $71,623.67 short. The shortage was caused because neither the last draw from the Rehab Reserve (February 2019) nor the final payment from the Interest Reserve (March 2019) were reflected in the reserve balance ledgers that are routinely used to prepare pay off calculations."

 Since then, IRM has reached out and discussed the matter with Mr. Daniel Epstein, the executive in charge on behalf of Invest Squared, a real estate firm based in New York that also includes Mr. Yonah Kaufman and Joseph Kaufman among its executives.

 Despite our efforts, including legal notices sent on on July 9th, July 15th, July 26th, and August 8th of this year, Mr. Epstein has refused the pay the outstanding debt, offering a 10% settlement which IRM rejected on behalf of investors.

 IRM now plans to hand over the debt to an established collection agency, including all rights to pursue Invest Squared and its executives in a court of law, on behalf of investors, and will post an update once that process is complete.

I'm in on that deal as well. The way I read it/interpreted it is both parties effectively shook hands and concluded the deal was finalized. Then nearly 2 months later (mid May -> early July) the error was detected and they went back to get the money but no longer have any hold on the property:

"received the funds for the payoff of the loan on May 16, 2019. Once the payoff funds were received, RealtyShares’ fund administrator began the reconciliation process and on July 3rd, 2019, reported that the payoff was $71,623.67 short."

I don't live in that world, so a nearly 2 month gap between final pay off and reconciliation may be normal... but seems long to me given the surrounding RS circumstances.

I'm just assuming I'm not going to get anything else out of that deal.