Author Topic: Thoughts On RealtyShares Closing Its Doors To New Investors  (Read 655709 times)

RSdude

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #40 on: November 11, 2018, 07:45:29 AM »
Hey everyone,
I have a mix of Common Equity and Preferred Equity on the platform, so hopefully will see some of the capital back.

Did see that one of them is not under the usually "RS***" type LLC, but under "RS Pref Projects, LLC" umbrella, which has different series with unsecured note... That said, the payments are current so time will tell.

Will track this thread, and if things go south and people want to pool resources, am happy to chime in.

Thanks

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #41 on: November 12, 2018, 12:03:17 PM »
Hi Folks,

I'm getting lunch with a senior mgmt member of RS over the next week or so. I will ask more about assurances from our investments. But if there are any other questions I should have, please let me know ASAP.

Thanks, Sam
Regards,

Sam

dwengca

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #42 on: November 13, 2018, 09:55:34 AM »
Greetings,

I have invested over $250k in RS investments.  Currently, I have 17 active investments with 180K still active.  At this point, I am very worried.  6 out of 17 of my active investments are in bad shape.  One is even pending forced eviction.   I have serious doubt that RS or the new "administrator" would be going after these investments aggressively to recover our money.  I can't get RS to respond to my emails for 5 days, how am I gonna expect them to go after these folks?   I am seriously considering getting some legal representation at this point to protect my investment.

In any case, let me list the current investment I have and the status that I'm aware of..

1. 151 Bernard Street, San Francisco, CA, foreclosure pending
2. 220 Unit Multifamily in Springfield, IL, Springfield, Illinois, consistently late payments, way exceeded the original exit date - no real action from RS
3. Club Creek Apartments - no updates and no distribution yet
4. Mooresville Festival in Charlotte Metro, Mooresville, NC  - on track
5.  Redford Package 2, Redford Charter Township, MI - late payment, no real action from RS
6.  292 Corning Drive, Bratenahl, OH - foreclosure pending - supposedly it would take 12 months to foreclosed in OH according to RS
7.  333 Parnassus Avenue, San Francisco, CA - this is a major problem.  The house is already foreclosed, but the original owner refused to move out.  This is pending forced eviction, but I really don't know what is going to happen now.
8.  1 Sand and Sea, Carmel, CA - paying interest, but project seriously behind schedule
9. Ortega Village Townhomes, Jacksonville, FL,  on track
10. The Realm Multifamily in Fort Worth, Fort Worth, TX, under performing
11.  3081 Carrigan Canyon Drive Tranche 3, Salt Lake City, UT -  foreclosure pending 
12. Philadelphia Multifamily Fund VII, Philadelphia, PA - on track
13.  Corey Place, TX,  on track
14. The Plaza Apartments, Jacksonville, FL, on track
15. Sutton Square Townhomes, Columbus, OH, on track
16.  Hampton Inn Memphis Collierville, Collierville, TN, on track
17.  New Jersey Multifamily Fund II, on track

As you can see above, so many of my active investments are in bad shape.  I really think that RS have not been properly managing our investments...

Dennis

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #43 on: November 13, 2018, 10:16:37 AM »
Hi Dennis, thanks for sharing. What was your criteria for choosing these investments?

Best to give them some time to sort things out since they just closed their doors. They are probably working on a bunch of stuff now and will probably be more responsive after the transition by year end imo. If you decide to go the legal route, let me know! It'll be interesting to follow what a lawyer can do. thx
« Last Edit: November 13, 2018, 10:20:36 AM by Sam »
Regards,

Sam

tim2018

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #44 on: November 13, 2018, 10:49:58 AM »
Hi Sam, thanks for this forum.  Certainly was surprise news, although their new "RS" logo/brand raised suspicions with me as it seems rather amateurish.  Realty Mogul's new logo is immensely better.

I've reviewed the 3 multi-family investments I have and all have decent sponsor stakes, so I have my fingers crossed.  My investments are spread out between Realty Mogul, Realty Shares, Fundrise, and Equity Multiple.  At this point, I am holding off on making any new investments, but my highest confidence is with Realty Mogul.  Fundrise, as a pioneer, was smart and pivoted early from single, private offerings to a REIT/fund model.  Unfortunately, Realtyshares was too late in the shift.

Good luck to all,
Tim

Derek

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #45 on: November 13, 2018, 11:23:59 AM »
Greetings,

I have invested over $250k in RS investments.  Currently, I have 17 active investments with 180K still active.  At this point, I am very worried.  6 out of 17 of my active investments are in bad shape.  One is even pending forced eviction.   I have serious doubt that RS or the new "administrator" would be going after these investments aggressively to recover our money.  I can't get RS to respond to my emails for 5 days, how am I gonna expect them to go after these folks?   I am seriously considering getting some legal representation at this point to protect my investment.

As you can see above, so many of my active investments are in bad shape.  I really think that RS have not been properly managing our investments...

Dennis

I have a few in a similar situation (including Carrigan Canyon), but I shifted from SFR debt deals to equity and have so far experienced better performance. I still do have $25K in active debt investments with RS, most of which should have already been returned this year but have either been extended or are in default. I'll be interested to see if we get more individual investment communication from RS instead of the more generic 'nothing will change' language. That's exactly the kind of thing they would tell you as they're backing up the truck  ;) Keep us updated on whatever action you choose to take.






dwengca

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #46 on: November 13, 2018, 01:44:30 PM »
Hi Dennis, thanks for sharing. What was your criteria for choosing these investments?

 Hi Sam,  originally, I was focusing on just "debt" investments.  However, soon I realized many of these debt investments were not properly vetted, so I switched over to large apartment units type of investments.  As you can see from my list, nearly all of them that are in trouble are the single luxury type of home.   This was definitely a learning for me.


Best to give them some time to sort things out since they just closed their doors. They are probably working on a bunch of stuff now and will probably be more responsive after the transition by year end imo. If you decide to go the legal route, let me know! It'll be interesting to follow what a lawyer can do. thx

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #47 on: November 13, 2018, 07:04:00 PM »
Dennis - Yeah, The single-family home investments tend to be the poor performers. They are also the least profitable and Hardest to manage. Hence why they sold their single-family business.

Tim - I hope you are right about realty mogul. I talk to their CEO at length and she seems to really focus on the long game. Focused on profitability, multi family commercial property, and overall sustainability.
Regards,

Sam

sdnerd

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #48 on: November 13, 2018, 09:47:08 PM »
Definitely unfortunate - I thought RS was the industry leader. I could be wildly off base, but I wonder if they weren't "covering out of pocket" some deals that went south and paying investors ultimately out of pocket to save face. In the early stages so much of their platform depends on deals going well for investors - they need(ed) the word of mouth, the referrals, etc. Might contribute to some of the heavy burn. Again, I could be completely wrong on this - but in the back of my mind (to a degree) it lowered the risk profile in my head figuring they would "make things work out" in the early days.

Since we're all in the same boat, figure I"ll share my experience/situation as well. I've had 7 total deals - all with the same profile: Prefunded, Senior Position Debt, Short term (12 mo or less) targeted towards repeat sponsors. (My play was I think housing/etc in general is going to be in for a correction, so wanted to go short term and be first in line on the cap table).

3 of them exited successfully; all were single or multi family.
4 remain active - all of which are fast food (Dog Haus, Captain D x2, Church's Chicken). A couple of these have been extended, and a few late payments, but as of right now everything is current. Sponsor has ~20%+ skin in the game.

Little nervous as some of the fast food are from the same sponsors so a bit of concentrated risk there. Fortunately all of them have 20 year leases, some of them are already built and in operation, and up for sale. Still a little nervous though all things considered.

Ultimately this will probably be the end of my real estate crowd-sourcing adventure for the foreseeable future. When the King (in my mind, and this case RealtyShares) falls - and I mean falls, not acquired by anyone... not a good sign. There must be something behind the curtain that's really ugly we don't know about. Economy also getting a little shaky here, rates moving up, asset prices across the board all bubbled up...

Keeping fingers crossed for everyone.


Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #49 on: November 14, 2018, 09:17:50 AM »
THanks for sharing SDnerd. I agree, It is good to take a pause and see what happens. I’m sure they are talking to other real estate investment managers to see if they can sell their portfolio as well. It’s up to them to explore all options to maximize return for the investors in their company, not on their platform.
« Last Edit: November 14, 2018, 07:41:45 PM by Sam »
Regards,

Sam

reidy83

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #50 on: November 14, 2018, 12:56:50 PM »
In response to SDNERD:

I have been investing through Crowdfunding RE sites since early 2013 and have invested in well over 150 deals since that timeframe. There were a few including RS who did "cover out of pocket" costs for deals that went south. Some of them are still around today but Ifunding and now Realty Shares have fallen by the way side.

I agree with Sam that we need to be patient since every site that I have worked with except Fundrise had a deal or multiple deals go bad and that is the nature of the investing game. (Fundrise changed their model so no individual deals to lose)

I was fortunate (now unfortunate) to participate in the Series C funding round for Realty Shares. At that time based on my experience, RS was "THE" platform and I thought they would be the "de facto" standard for this marketplace. I still have over 30 active deals with RS so I am hopeful that the team that remains will keep the ship afloat. I assume a handful of deals will go bad but hopeful that it is a small minority.

Sam-----RS has been notoriously slow on disseminating K-1's on a timely basis. Hopefully, they will be paying more attention to this in the Spring. Can you bring this up as a topic?

thx

PandaAtlanta

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #51 on: November 14, 2018, 05:10:29 PM »
Sam,
I don't usually post on your FS main site, but I want you to know that I am a long term fan and really respect your financial guidance and wisdom. I wanted to ask you if you had any regrets selling your SF property? Your 2016-2017 FS passive income stream chart really resonated with me as the master passive income allocation where 50% of your passive income came from rental income from Real Properties. You had mentioned before that real estate is your favorite asset class which was also mine as well. Once you sold your SF property and real property passive income allocation dropped to 21% from the '16-'17 allocation of 52%, for the first time I felt that we were moving in different directions. Personally for me control over the real estate asset (tenant selection, financing, leasing, selling, commissions paid, etc) was very important to me. I was also very tempted to invest RealtyShares because you were investing in crowdfunding, but to invest as a limited partner with no control over my real estate asset held me back from making such a move. If you were able to go again, would you have sold your SF property without any regrets?

My current passive income allocation is very similar to what yours looked like in 2016 - 2017, and plan to keep this % allocation going forward.

Interest Income : 13%
Dividend Income: 12%
Real Estate Income: 50%
Alternative Income: 25%

Thank you for your feedback.   
« Last Edit: November 14, 2018, 05:28:42 PM by PandaAtlanta »

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #52 on: November 14, 2018, 07:47:56 PM »
Reidy83 - Thanks for your feedback. Interesting insight on Fundrise,  which so far has my lead replacement when people ask what other platforms to consider. I have worked with them since 2016 and I have found that I have always been the most innovative. Their  ability to raise capital  from there “Internet public offering” as impressive, and that’s what they’ve done over the past 6 to 9 months.

As a RS platform and series C investor, I hope you can use you influence to make sure they do the right thing as well. I certainly will.

 I still think there is about a 30% chance they will sell their book of business to another player. Having a $4 million-$5 million a year revenue stream as attractive. I would probably paid $10 million for it , which recoups around 15% of the total VC investment.
Regards,

Sam

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #53 on: November 14, 2018, 07:52:54 PM »
Panda - I just told my wife tonight that I have absolutely no regrets selling the rental property last year. 4Q2017 looks like the temporary top of the market at least here in San Francisco.  If I still owned the property today with the stock market melting down in coastal city real estate market softening due to rising inventory in rising interest rates, I wouldn’t feel very good.

 Was only a 2.5% cap rate, I’d much rather just own treasuries and muni bonds making more. So far, my RS investments have performed better than expected.  For example, I was only expecting about $9500 in passive income for the year, but I’ve received over $20,000 so far.  I have made on the equity investments with long-term time horizons.

 Only time will tell whether my investments will prove profitable. But I do know in the meantime, that I am loving not having to manage my San Francisco rental home anymore. I don’t have time or the patience now that I’m a full-time dad. This piece of mind is priceless. I’ll never get back time from my son. It would piss me off to no end if I had to manage my property and bad tenants instead of spending time with my boy.
« Last Edit: November 15, 2018, 09:47:28 AM by Sam »
Regards,

Sam

techOnFIRE

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #54 on: November 15, 2018, 06:45:58 AM »
I'd like to report two ontime deposits were made yesterday.  More expected next week.

CPAprenuer

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #55 on: November 15, 2018, 08:45:50 AM »
I'm happy (and surprised) to report that 5 out of 6 of my RS investments have already paid me this month as of today!  Also, the payments are earlier on average than previous months - I guess when their only focus now is to manage the current portfolio they can get things done quicker and more efficiently.  Cheers to continued monthly cash flow!

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #56 on: November 15, 2018, 09:46:07 AM »
I'm happy (and surprised) to report that 5 out of 6 of my RS investments have already paid me this month as of today!  Also, the payments are earlier on average than previous months - I guess when their only focus now is to manage the current portfolio they can get things done quicker and more efficiently.  Cheers to continued monthly cash flow!

Right on! I added this part to my post:

9) Salvage what you have. A $400 million investment portfolio that generates $4M – $5M a year in fees is significant. I suspect the portfolio could easily be sold to a competitor or money manager for $5M – $10M. After five years, the acquirer would earn a 50%+ return while also having a potential new set of accredited investors to do more business. Meanwhile, investors in RealtyShares, the company, would recoup some of their $60M+.
Regards,

Sam

dreucla21

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #57 on: November 15, 2018, 11:37:47 AM »
I recently jumped into the crowdfunding real estate market after extensive research and picked the Fundrise and RealtyShares platforms to start with. I only invested in one offering at RealtyShares and am not really sure what's going to happen with my money.

In particular, I invested in the "Evergreen at the Bluffs" equity offering in Knoxville, TN (RealtyShares 387, LLC):
https://www.realtyshares.com/investments/evergreen-at-the-bluffs

I'm not really sure what to expect as there haven't been any distributions yet. The deal was pre-funded on 06/22/2018. Since I'm relatively new to RealtyShares, how soon should I expect a status "update"? Also, did anyone else on this thread invest in this particular deal?

That being said, I'm really glad I found this thread. It's good to know others are concerned (as I am) and monitoring the situation.

Sam

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #58 on: November 15, 2018, 03:10:06 PM »
Hi RS platform investors - The more I think about it, the more I think there's is a high likelihood RS's assets will be sold to a similar platform. A similar platform/competitor would be wise to buy it for many reasons.

Let's say someone buys the $400M in assets for $5 million, and the revenue generation of the assets is $15 million over the next 3 years. That's a 45% IRR for three years. Not bad. Then there are all the business synergies that go with buying the assets.

I spoke to someone else and he reaffirmed the VCs have no access to our investments. They are special purpose vehicles that are owned by investors in each real estate deal.

Finally, RS only got paid when platform investors got paid their distributions. Hence, whoever runs the assets, say a private asset manager or acquirer, their incentives are to make sure the sponsors do their jobs, so that they can also get paid.

Keep the faith!

Sam
« Last Edit: November 15, 2018, 03:14:48 PM by Sam »
Regards,

Sam

Cheezus

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Re: Thoughts On RealtyShares Closing Its Doors To New Investors
« Reply #59 on: November 15, 2018, 04:35:33 PM »
Appreciate the updates.  I'm feeling better about my RS investments as the days tick by.