- Welcome to Financial Samurai - Forums.
Financial Freedom Sooner Rather Than Later
Recent posts
#21
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by mspringer - October 01, 2021, 04:48:07 AMQuote from: Dgilpin on September 30, 2021, 01:30:56 PM
Where did everyone on this forum go? When Franchise Growth was failing, this board was blowing up, now we are getting the stunningly poor settlements and no one has anything to say? I spoke to Ian Mclaughlin, the attorney representing the class action against FG, about the Taylor Michigan Dog Haus deal. He said that with the communication we received in January of 2020 about the closure being "signed sealed and delivered" for a .91/1.00 return, only to be nixed so that IIRRM could bundle other investments into the deal, he believed we had an compelling case against IIRRM for disingenuously representing our interests above and beyond the suit involving the larger FG portfolio. To those wondering, the final settlement message came last week as follows:
"This investment is being moved to Closed status.
IRM was engaged by RealtyShares to manage this investment in June 2019.
Since then, IRM has used every possible resource at our disposal to try and
maximize the possible return for investors. In certain problematic
investments, IRM has deployed Asset Managers to physically tour the
property, commissioned third party appraisals, held discussions with local
brokers, competitors, and potential buyers. IRM has used third party forensic
accounting, private investigators, senior leadership negotiations and both
in-house and out-sourced legal teams in an attempt to extract the best
possible financial outcome for investors. IRM does not endorse the
underwriting, investment agreements or asset management work provided
previously by RealtyShares Inc., but IRM is bound by those original terms as
signed by investors.
As mentioned in prior updates, IRM has negotiated with a third party to
purchase the individual loans associated with the Franchise Growth
investments the RealtyShares investors had made. Each loan is a stand alone
investment and therefore, each loan has a different purchase price based on
the estimated value, percentage of completion, location, etc. The sale price is
based on a BOV that IRM obtained, and represents the best value for
investors, in our professional opinion, given the circumstances. The vast
majority of the loans were vacant land or only partially completed
improvements.
The alternative to conducting a loan sale would have resulted in a significant
delay in moving through the foreclosure process, extensive legal costs, back
real estate taxes and other potential delays in foreclosing on the properties.
Even after a foreclosure, there are sales and closing costs associated with that
action. Therefore, a loan sale was the most effective way to get back some of
the RealtyShares investment, and in our opinion and estimate, this was the
method that presents the best value over time for investors. IRM has waived
asset management fees from January 2021 and forward.
Specifically with this investment, the sales price was negotiated at $550,000.
In addition, the borrower made prior payments of $606,262.92 as reported on
historical RealtyShares payment records, for a total gross payment of
$1,156,262.92. This is the gross payment before fees and expenses. IRM has
classified this investment as Closed on 8/23/2021. The static return was a
72% loss or 17.5% per year loss, calculated as follows:
$1,156,262.92 / $4,091,000 = 0.28
0.28 - 1.0 = (0.72)
(0.72) / 4.1 (years of actual hold) = 0.175 or a 17.5% loss per year
This investment will now terminate as all possible payments to investors have
been collected and distributed to investors. Please note that, as is common
practice, certain funds may be held back in order to cover property related
expenses, such as legal fees, back taxes or other invoices. Once all possible
invoices have been paid, any remaining funds will be distributed to investors
in full.
IRM will now close this investment, no further updates, payments or
distributions will be made for this investment (except for Held Back balance
distribution, as applicable). IRM has not waived any rights, by any party or
manager, to file claims against the original sponsors in this matter"
How IIRRM could accept a 72% loss on first lien debt is jaw dropping. It speaks to how determined they were to collect their fees on these deals and close the books as fast as possible with complete disregard for investor interests. I am currently seeking counsel to bring claim against IIRRM for this deal but haven't found a suitable attorney. There is certainly better potential as a class action case for all investors of this deal. If any other investors in this deal want to work on this with me, please DM me.
Dgilpin,
I wasn't in this specific FG investment but did have similar results for a Church's Chicken in the Orlando area. I think the issue with the board now is FG and IIRM played the long game and it looks like it is going to be successful. Many of us had investment (small to large) and the initial visceral reaction was in part due to losing money and also losing opportunity cost, given how the marker performed. It's been so long, and many have just "written this off" both financially and as a lesson learned, that this board and the investment(s) aren't at the top of our daily checks. I'm not saying this is right or how it should be, but just my thoughts.
#22
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by Dgilpin - September 30, 2021, 01:30:56 PMWhere did everyone on this forum go? When Franchise Growth was failing, this board was blowing up, now we are getting the stunningly poor settlements and no one has anything to say? I spoke to Ian Mclaughlin, the attorney representing the class action against FG, about the Taylor Michigan Dog Haus deal. He said that with the communication we received in January of 2020 about the closure being "signed sealed and delivered" for a .91/1.00 return, only to be nixed so that IIRRM could bundle other investments into the deal, he believed we had an compelling case against IIRRM for disingenuously representing our interests above and beyond the suit involving the larger FG portfolio. To those wondering, the final settlement message came last week as follows:
"This investment is being moved to Closed status.
IRM was engaged by RealtyShares to manage this investment in June 2019.
Since then, IRM has used every possible resource at our disposal to try and
maximize the possible return for investors. In certain problematic
investments, IRM has deployed Asset Managers to physically tour the
property, commissioned third party appraisals, held discussions with local
brokers, competitors, and potential buyers. IRM has used third party forensic
accounting, private investigators, senior leadership negotiations and both
in-house and out-sourced legal teams in an attempt to extract the best
possible financial outcome for investors. IRM does not endorse the
underwriting, investment agreements or asset management work provided
previously by RealtyShares Inc., but IRM is bound by those original terms as
signed by investors.
As mentioned in prior updates, IRM has negotiated with a third party to
purchase the individual loans associated with the Franchise Growth
investments the RealtyShares investors had made. Each loan is a stand alone
investment and therefore, each loan has a different purchase price based on
the estimated value, percentage of completion, location, etc. The sale price is
based on a BOV that IRM obtained, and represents the best value for
investors, in our professional opinion, given the circumstances. The vast
majority of the loans were vacant land or only partially completed
improvements.
The alternative to conducting a loan sale would have resulted in a significant
delay in moving through the foreclosure process, extensive legal costs, back
real estate taxes and other potential delays in foreclosing on the properties.
Even after a foreclosure, there are sales and closing costs associated with that
action. Therefore, a loan sale was the most effective way to get back some of
the RealtyShares investment, and in our opinion and estimate, this was the
method that presents the best value over time for investors. IRM has waived
asset management fees from January 2021 and forward.
Specifically with this investment, the sales price was negotiated at $550,000.
In addition, the borrower made prior payments of $606,262.92 as reported on
historical RealtyShares payment records, for a total gross payment of
$1,156,262.92. This is the gross payment before fees and expenses. IRM has
classified this investment as Closed on 8/23/2021. The static return was a
72% loss or 17.5% per year loss, calculated as follows:
$1,156,262.92 / $4,091,000 = 0.28
0.28 - 1.0 = (0.72)
(0.72) / 4.1 (years of actual hold) = 0.175 or a 17.5% loss per year
This investment will now terminate as all possible payments to investors have
been collected and distributed to investors. Please note that, as is common
practice, certain funds may be held back in order to cover property related
expenses, such as legal fees, back taxes or other invoices. Once all possible
invoices have been paid, any remaining funds will be distributed to investors
in full.
IRM will now close this investment, no further updates, payments or
distributions will be made for this investment (except for Held Back balance
distribution, as applicable). IRM has not waived any rights, by any party or
manager, to file claims against the original sponsors in this matter"
How IIRRM could accept a 72% loss on first lien debt is jaw dropping. It speaks to how determined they were to collect their fees on these deals and close the books as fast as possible with complete disregard for investor interests. I am currently seeking counsel to bring claim against IIRRM for this deal but haven't found a suitable attorney. There is certainly better potential as a class action case for all investors of this deal. If any other investors in this deal want to work on this with me, please DM me.
"This investment is being moved to Closed status.
IRM was engaged by RealtyShares to manage this investment in June 2019.
Since then, IRM has used every possible resource at our disposal to try and
maximize the possible return for investors. In certain problematic
investments, IRM has deployed Asset Managers to physically tour the
property, commissioned third party appraisals, held discussions with local
brokers, competitors, and potential buyers. IRM has used third party forensic
accounting, private investigators, senior leadership negotiations and both
in-house and out-sourced legal teams in an attempt to extract the best
possible financial outcome for investors. IRM does not endorse the
underwriting, investment agreements or asset management work provided
previously by RealtyShares Inc., but IRM is bound by those original terms as
signed by investors.
As mentioned in prior updates, IRM has negotiated with a third party to
purchase the individual loans associated with the Franchise Growth
investments the RealtyShares investors had made. Each loan is a stand alone
investment and therefore, each loan has a different purchase price based on
the estimated value, percentage of completion, location, etc. The sale price is
based on a BOV that IRM obtained, and represents the best value for
investors, in our professional opinion, given the circumstances. The vast
majority of the loans were vacant land or only partially completed
improvements.
The alternative to conducting a loan sale would have resulted in a significant
delay in moving through the foreclosure process, extensive legal costs, back
real estate taxes and other potential delays in foreclosing on the properties.
Even after a foreclosure, there are sales and closing costs associated with that
action. Therefore, a loan sale was the most effective way to get back some of
the RealtyShares investment, and in our opinion and estimate, this was the
method that presents the best value over time for investors. IRM has waived
asset management fees from January 2021 and forward.
Specifically with this investment, the sales price was negotiated at $550,000.
In addition, the borrower made prior payments of $606,262.92 as reported on
historical RealtyShares payment records, for a total gross payment of
$1,156,262.92. This is the gross payment before fees and expenses. IRM has
classified this investment as Closed on 8/23/2021. The static return was a
72% loss or 17.5% per year loss, calculated as follows:
$1,156,262.92 / $4,091,000 = 0.28
0.28 - 1.0 = (0.72)
(0.72) / 4.1 (years of actual hold) = 0.175 or a 17.5% loss per year
This investment will now terminate as all possible payments to investors have
been collected and distributed to investors. Please note that, as is common
practice, certain funds may be held back in order to cover property related
expenses, such as legal fees, back taxes or other invoices. Once all possible
invoices have been paid, any remaining funds will be distributed to investors
in full.
IRM will now close this investment, no further updates, payments or
distributions will be made for this investment (except for Held Back balance
distribution, as applicable). IRM has not waived any rights, by any party or
manager, to file claims against the original sponsors in this matter"
How IIRRM could accept a 72% loss on first lien debt is jaw dropping. It speaks to how determined they were to collect their fees on these deals and close the books as fast as possible with complete disregard for investor interests. I am currently seeking counsel to bring claim against IIRRM for this deal but haven't found a suitable attorney. There is certainly better potential as a class action case for all investors of this deal. If any other investors in this deal want to work on this with me, please DM me.
#23
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by cgblack - September 27, 2021, 02:00:14 PMQuote from: dwengca on June 11, 2021, 01:47:39 PM
I agree! I got $20k on this one, and probably all gone now. I really think there might have been some sort of fraud going on here... how did they go from 6.6 million to end up costing 10.5 million?
The sad part I think here is that IRM will probably just let it go.Quote from: cgblack on June 11, 2021, 12:46:07 PM
A disappointing update on 1 Sand and Sea:
=====
IRM currently classifies this investment as a Tier 3 asset. Distributions from this
investment have not been distributed in accordance with the original business plan.
Since the last update, the house did sell. It was previously mentioned the closing was
delayed primarily due to the actions of one of the Managing Members (MM). The MM
who was trying to cause the delay demanded he get back his equity investment before
he would consent to the sale of the house. The active MM who completed the house
said the other MM decided not to contest the sale.
The house sold for $9,000,000 and after $450,000 of real estate commissions and
approximately $190,000 of other selling costs, the net sale price was $8,360,000. The
MM reported that the total acquisition, construction and financing cost was $10,528,196,
so the loss was $2,168,196.
The MM who has been involved in completing the house is a CPA. We have requested
much more detail than just a summary of the expenses. We will continue to work on
obtaining the detailed information to determine if the expenses were legitimate and
there was an actual loss. We are also taking steps to determine if there is any recourse
against the MMs for the apparent loss on this investment.
======
This is outrageous. Here is the original listing for this investment:
======
The total investment, including purchase price, hard and soft costs, and closing costs is approximately $5,572,642. The senior debt will contribute approximately 47.5% of project costs, while RealtyShares investors will contribute approximately 35.9%, leaving the sponsor with a 16.5% contribution to total project cost. The estimated sales price upon completion is $6,600,000, or $3,185/sf (1). However, in order for the Sponsor to return the investors' equity, preferred return, and annualized exit fee upon sale, the sales price need only be $5,112,903, or $2,468/sf.
======
Suddenly a net sales price of $8,360,000 comes out as a loss. Something stinks about this one!
You could have completely torn down the house and rebuilt it for much less than the alleged cost overrun they are claiming. You'd have to be completely incompetent or fraudulent to rack up a $4 million overrun on what I seem to recall was a estimated $600,000 construction budget.
How long does it take to get an accounting?? The longer it takes the more fraudulent it appears.
#24
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by dwengca - September 19, 2021, 02:38:32 AMSo this one will be a total 100% $20k loss for me. Received the below update. It sure seems like they won't go after the 3 partners who were the guarantors of this deal. What is the point of having these guarantors? Basically they meant nothing. Investing in RS was probably the dumbest thing I have ever done. I'm staying away from these BS for the rest of my life.
As mentioned in the last update, we have requested much more detail than just a summary of the
expenses as previously provided by one of the Managing Members. We have been in
communication with him, and we anticipate we should get additional information soon to determine
if the expenses were legitimate and there was an actual loss. Three of the four Managing Members
are guarantors under the Operating Agreement, and we will have legal counsel determine if there is
any recourse against them for the apparent loss on this investment. Even if the guarantors are
liable for repayment of the RS investment, there would likely be a lengthy and expensive legal
endeavor in which there is no certainty of outcome. Any recovery of the RS investment is highly
uncertain at this point.
As mentioned in the last update, we have requested much more detail than just a summary of the
expenses as previously provided by one of the Managing Members. We have been in
communication with him, and we anticipate we should get additional information soon to determine
if the expenses were legitimate and there was an actual loss. Three of the four Managing Members
are guarantors under the Operating Agreement, and we will have legal counsel determine if there is
any recourse against them for the apparent loss on this investment. Even if the guarantors are
liable for repayment of the RS investment, there would likely be a lengthy and expensive legal
endeavor in which there is no certainty of outcome. Any recovery of the RS investment is highly
uncertain at this point.
#25
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by berkel - September 10, 2021, 06:22:11 AMReceived a payment for the FG American Family Care in Largo FL. Here is the notification:
IRM on behalf of RealtyShares, Inc. processed the payment for your investment in RSL.2017A.163 -
8040 Ulmerton Road - American Family Care (Largo, FL). This distribution covers the accrual period
from 06/19/2019 to 08/31/2021.
The amount was $34.49, but note the accrual period!
I had "invested" $5k in this one and received $2300 in principal back in 2019 + $450 interest prior.
So there is still $2600 outstanding. Another notification say this deal is one of the last to get bought out closing "around" Oct 2021. Per the other experiences, I'm not expecting much back of my $2600 but hopefully something...
Still have one other non FG deal that is pending and hope to recoup that so I never have to look at RealtyShares again.. GLTA
IRM on behalf of RealtyShares, Inc. processed the payment for your investment in RSL.2017A.163 -
8040 Ulmerton Road - American Family Care (Largo, FL). This distribution covers the accrual period
from 06/19/2019 to 08/31/2021.
The amount was $34.49, but note the accrual period!
I had "invested" $5k in this one and received $2300 in principal back in 2019 + $450 interest prior.
So there is still $2600 outstanding. Another notification say this deal is one of the last to get bought out closing "around" Oct 2021. Per the other experiences, I'm not expecting much back of my $2600 but hopefully something...
Still have one other non FG deal that is pending and hope to recoup that so I never have to look at RealtyShares again.. GLTA
#26
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by mspringer - September 03, 2021, 05:42:41 AMQuote from: Kalliste on September 01, 2021, 10:30:58 AM
Allover, what are your lessons?
I won't speak for Allover, but one lesson I learned was:
If you want to invest in real estate, do so with a real estate company that outsources their platform.... NOT a platform company that outsources their real estate.
#27
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by Kalliste - September 01, 2021, 10:30:58 AMAllover, what are your lessons?
#28
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by Allover - August 30, 2021, 08:48:51 AMAll,
First post in a while.
Gotten some payouts in recent weeks. Haircuts all around.
Its mind blowing to me that someone could manage to lose money on a fast food joint in Orlando Florida.....Yet here we are. Now more than ever before I can not help but feel there was some fraud here. More than just stupidity. More than just careless business practice. Fraud. Its just too systematic. Happened too many times. To many places. Losing money in CA real estate in this market?? Losing money in FL real estate in this market? WTF??
The only good news is that I am shortly ( this year) to be fully done with this pack of clowns.
Net, Net, Net It looks like I am going to have lost about $15,000 after its all said and done. Plus a ton of time and hassle and heartache.
An expensive, yet valuable lesson.
Once again ; If anyone knows anyone in some type of law enforcement agency please share your experiences with RS with them.
Only when people with badges show up will the real truth start coming out.
Until then they will hide the facts by telling people they cant find the documents, etc.
BTW : Lawsuit is going nowhere so don't count on being saved by that.
Good luck to all !!!
First post in a while.
Gotten some payouts in recent weeks. Haircuts all around.
Its mind blowing to me that someone could manage to lose money on a fast food joint in Orlando Florida.....Yet here we are. Now more than ever before I can not help but feel there was some fraud here. More than just stupidity. More than just careless business practice. Fraud. Its just too systematic. Happened too many times. To many places. Losing money in CA real estate in this market?? Losing money in FL real estate in this market? WTF??
The only good news is that I am shortly ( this year) to be fully done with this pack of clowns.
Net, Net, Net It looks like I am going to have lost about $15,000 after its all said and done. Plus a ton of time and hassle and heartache.
An expensive, yet valuable lesson.
Once again ; If anyone knows anyone in some type of law enforcement agency please share your experiences with RS with them.
Only when people with badges show up will the real truth start coming out.
Until then they will hide the facts by telling people they cant find the documents, etc.
BTW : Lawsuit is going nowhere so don't count on being saved by that.
Good luck to all !!!
#29
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by mspringer - August 26, 2021, 05:04:09 AMQuote from: sdnerd on August 25, 2021, 12:58:04 PM
My Realtyshares/Financial Growth saga is finally appearing to be at an end. For those that are interested:
Louisville MSA Captain D's = 67% loss of principal. Total loss of 58% after accounting for interest distributions.
Detroit MSA Dog Haus and Taco John's = 47% loss of principal; 36% after distributions.
Coastal Florida Church's Chicken, Melbourne, FL = 66% loss of principal; 45% after distributions.
Fortunately all of my other deals with RS exited successfully with some decent numbers. As a result my grand total is a $10,000 loss with RealtyShares and a couple years opportunity cost.
Annoying to say the least, and I'm still somewhat amazed how deep some of those haircuts were considering the current market. Hope the rest of you got better results with your FS properties!
Similar for me and overall I am down a little. While I am also amazed they weren't able to get more for FG in today's market, somehow RealtyShares and I were able to find a real dud in Pacific Palisades, CA.
It was a $1MM 2nd lien that went to tearing down the existing house and then default. Just saw the lot sold Jun '21 for $2.3MM with a Zillow estimate of $5.2MM.
I still have no idea how you could lose money in real estate from 2017 until now. Yet... here we are.
#30
Real Estate Crowdfunding / Re: Thoughts On RealtyShares C...
Last post by andyo - August 26, 2021, 03:20:26 AMSo - MSA Orlando Church's Chicken - just received a check showing a 73% loss of principal, 62% after considering prior earnings. The dashboard says that the balance (the 73%) is still an active investment but I'm not sure how - if they've sold the debt, doesn't that mean that the deal is over?