BiggerPockets

I took the company name out just in case. I don't want to get in trouble for posting there deals on internet. I just want idea what you guys think. Even you know i bet you can find out the name of the company from my other post.

Blank Investment Group has selected a property that we feel will benefit you and your portfolio in growth and return.

Target Property: Development in Hollywood, This New Development of 4 Single Tri Level Loft/Townhomes, is Located near Paramount Pictures and just mere blocks away is a Future development of nearly $1 Billion.

Return: A construction loan has already been granted for $1,800,000 after property is acquired. This said property will be purchased for $500K through foreclosure. Located in an area where land is worth at least $750K - $1 Million. The project is being picked up from another developer. This developer has already paid for clearing the land, geo soil tests, blueprints/architects, permits, city approval with a new high density ordinance that was just approved last year.

Once Blank acquires this said property, the construction loan application can be finalized and transferred. This process will take approximately 60 days before the start of construction. Nine months of construction will lead to properties that will be sold. During this time Blank will give a promissory note that will be guaranteed by Blank, and secured by this project. For this Blank can give you the investor 40% return on your initial Investment.


Minimum investment is $50k

Due to the soft market we are able to take advantage of another developers failed attempt to turn a profit and we can together enjoy the benefits.

These seem to rarely be good deals. Look at the Trada thread for a similar deal where people are now stuck on properties that aren't built. There's no way to get their money back because Trada has no money.

That statement "During this time Blank will give a promissory note that will be guaranteed by Blank, and secured by this project." means very little. If Blank fails, like the developer that already tried in this location, they will have no assets for you to go after.

If nothing is built there, you and any other investors, will end up with a claim on an incomplete property that's worth well less than the sum of your investments, and would require either being sold at a fire sale price or more money to complete.

If it does get finished, what do you end up with? Can't really tell, but do you end up with a property at a retail price? Or, one at 60-70% of what you could immediately sell it for. If its retail, and you are determined to have something in that area, just go buy something now, and eliminate the risk of this developer failing. If they claim you'll be in at a big discount, do your own due diligence and see if you really can verify that.

If this is one of those sale/leaseback deals where you're guaranteed they will get you a tenant after its built, really do your due diligence carefully. Everyone of these I've looked at understates expenses, and they may give you an above market rent to make it look good. They make money because of all the fees that come out of that rent. After the guaranteed rental, you're stuck with something you can't rent, or can only rent at a loss.

Be careful.

Combined your other post into here. Looks like you're talking about the same company here.

Do you have any relationship with D&L? Or "blank", if they're really different?

Originally posted by Joshua Dorkin

Please disclose further your relationship with all companies you are discussing. Failure to do so will result in the closure and removal of this discussion.

No i don't have Relationship to the company.I just roll some money into a while ago with my partner. The company was hard money lender taken over property in Hollywood. The property is worth well over 800k in this market. Blank pick it up for 500k. They will not take more then 500k investment. Also each investor knows each other if they end up owning the land. You get 40% whatever you put in. Any more help or question to ask would be great thanks guys

Originally posted by GSG

Originally posted by Joshua Dorkin

Please disclose further your relationship with all companies you are discussing. Failure to do so will result in the closure and removal of this discussion.

No i don't have Relationship to the company.I just roll some money into a while ago with my partner. The company was hard money lender taken over property in Hollywood. The property is worth well over 800k in this market. Blank pick it up for 500k. They will not take more then 500k investment. Also each investor knows each other if they end up owning the land. You get 40% whatever you put in. Any more help or question to ask would be great thanks guys

That sure sounds like you're an investor in blank.

Is blank D&L?

I'm sure Trada investors thought their investment was backed up by real estate, too. If I make an investment, I want to see a deed of trust or mortgage with my name as the grantee. Do I get that from blank? Or, just shares in some corporation or membership in an LLC?

So, if D&L is the broker, and you're getting a deed of trust and promissory note on a property where you're loaning money to the owner, you're on the right track. You need to be sure the value of the property supports the loan. I would not go above a 70% LTV based on ARV if we're talking about an existing property. You must be sure YOU determine the value, not the owner/borrower. If part of the money is for rehab, hold that back until the rehab is actually done. You want to always be in a position where you're able to foreclose and take the property, then sell it for enough to a least cover your costs. You don't want to be in a position of being the bank (that's what you are as the lender) that has to do a short sale (that's your money you're losing on that short.)

If its new construction, and you're making a construction loan, you're in a much riskier position. If you give them the money to build a house, and they walk away, and all you have is a piece of land, you're looking as some serious losses. Again, release money ONLY as work is completed.

In either case, best to insist on release of lien by all contractors and subcontractors. Otherwise, the borrower can get work done, collect from you, not pay those contractors and subs, and let you take it. Then you end up with a decent property, but own all the money to the subs.

Sounds interesting, but I would not give any money up front. I would have all money put in an escrow account with my attorney, not theirs. I would have him look over this deed of trust and promissary note. They had deals like this in Downtown Charlotte, that the developer PROMISED condos and you had to put down $50k. But, the developer got over 100 people to do this and went belly up. Now the building was foreclosed on by the bank that loaned the developer money and now he is gone and can not be found.

What they do is use your money to either start the project or SCAM you by coming up with all sorts of stories that why the project is not complete. If I can not have my own deed I do not deal in deals like this.

If you feel comfortable with it. Go for it and I wish you the best.

LET THE BUYER BEWARE!!!!

SUCCESS BREEDS SUCCESS

Is this a dog and pony show, or what? First, a new poster arrives asking questions about a mysterious company. Then, it comes out that he is actually an investor. Then the owner magically appears after finding the investor here. Something stinks here and it isn't the pony dung!

In either case, best to insist on release of lien by all contractors and subcontractors. Otherwise, the borrower can get work done, collect from you, not pay those contractors and subs, and let you take it. Then you end up with a decent property, but own all the money to the subs.

Not just best, DON"T do the deal any other way. Release of all liens by all contractors and their subs must be granted or you should not enter into the deal.
Many don't know this, but in some states, it is actually a crime and the contractor can be arrested for this.

As for if this was a real deal or a "dog and pony show" as it was phrased, I am not sure. Time will tell.