Grocapitus - Anyone have experience with them?

Houston, TX · Member since 2018 · 29 posts · 5 votes

Hello,

Has anyone worked with Grocapitus and were their revenue estimates accurate? Any comments on things worked out? I tried searching the forum expecting to find something but was having trouble. Please PM if you've worked with them.

Thanks in advance,

Ryan

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Jeff Pollack

Real Estate Investor · Redwood City, CA · Member since 2012 · 272 posts · 399 votes

Do NOT invest with Grocapitus. Neal Bawa sounds like he knows what he's talking about, but his track record is terrible. Their underwriting is pie in the sky unrealistic and puts little or none of his own money into his deals. I have a buddy who invested in a project in Las Vegas that crashed and burned. They are now selling resulting in a 100% loss for investors.

I invested in a project with Neal Bawa and his former partner Jean-Marc Landau on a project in Buffalo, NY three years ago. Neal and Jean-Marc were supposed to secure construction funds. They were unable to do so and have ostensibly walked away from the project leaving their partners to clean up the mess. Despite their track record, both these guys continue to peddle their snake oil. They have become good at marketing out of necessity as nobody invests with them twice. Avoid them like the plague.

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Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
Guys, I am a partner in Neal’s company. So, I am a vested party, but am not an employee, so have no employee type pressure. One of the challenges with this string is that it is clubbing together two VERY different companies. The only company that Neal has had full control over is called Grocapitus. The projects discussed on this string are from a previous company called Financial Attunement, where Neal was a junior partner, and a senior partner was CEO of that company and primary decision-maker.

So, I feel that for a balanced discussion, this string can benefit from knowing Grocapitus' returns, since Neal founded it in February 2018, when he resigned from Financial Attunement. I happen to know that Neal left that company because he was not comfortable with the analysis and underwriting of their projects. Listed below are all the project exits Grocapitus has had, and I also happen to know that Grocapitus investors are very happy with their returns. I also happen to know that Grocapitus has three exits coming up in the first half of 2022, and all of these are expected to beat the leader in this table below (Park Canyon - 50% AAR) easily. Grocapitus expects to have a total of six profitable exits this year, and expects to make investors about 38% IRR on those six exits. As they say, the proof is in the pudding.

I reviewed our current investor list and Harish Verma is not an investor with Grocapitus, he was an investor in Financial Attunement. With the data-driven approach Neal developed, Grocapitus has a strong track record based on the actual return investors received. I will update the table below with three additional exits by or before July 2022.
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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Quote from @Eric Bleau:

Guys, I am a partner in Neal’s company. So, I am a vested party, but am not an employee, so have no employee type pressure. One of the challenges with this string is that it is clubbing together two VERY different companies. The only company that Neal has had full control over is called Grocapitus. The projects discussed on this string are from a previous company called Financial Attunement, where Neal was a junior partner, and a senior partner was CEO of that company and primary decision-maker.

So, I feel that for a balanced discussion, this string can benefit from knowing Grocapitus' returns, since Neal founded it in February 2018, when he resigned from Financial Attunement. I happen to know that Neal left that company because he was not comfortable with the analysis and underwriting of their projects. Listed below are all the project exits Grocapitus has had, and I also happen to know that Grocapitus investors are very happy with their returns. I also happen to know that Grocapitus has three exits coming up in the first half of 2022, and all of these are expected to beat the leader in this table below (Park Canyon - 50% AAR) easily. Grocapitus expects to have a total of six profitable exits this year, and expects to make investors about 38% IRR on those six exits. As they say, the proof is in the pudding.

I reviewed our current investor list and Harish Verma is not an investor with Grocapitus, he was an investor in Financial Attunement. With the data-driven approach Neal developed, Grocapitus has a strong track record based on the actual return investors received. I will update the table below with three additional exits by or before July 2022.

I understand Eric you are in same situation Neal was at Financial Attunement. You can always start another company and blame some else. Here are my questions.
Why has Neal not spoken against Financial Attnement?
Why is Neal still in the projects that he did not believe in, here are the updates I am getting:
============= Nov 2021===============
We still believe in this project, the market, and our future success. If you would like to have a one-on-one call with Neal regarding this project, please schedule a time via his Calendly.
==========
==============AUGUST 2021==================
The project team remains committed to delivering a great project to the market and a strong return to our investors. Should you have any questions, please don’t hesitate to reach out to the project team.

Thanks,

Dave Freeman, Justin Earl, Jean-Marc Landau & Neal Bawa
====================================
I have much more updates that i can share if you are not convinced.
Why does Grocapitus and MultiFamilyU or any other Neal company not have any contact address on website? Hiding something.
How do you have same actors - Neal, IVANNIA NAVARRETE etc in Grocapitus and Financial attunement? And expect different results now? Its not happened with Morris Invest/ Growth equity group or anywhere else, I do not trust it will happen here. Its hit or miss.
If someone wants to still invest with Grocapitus, not my problem. i do want to highlight that people selling these will just claim they knew things were wrong and now they have corrected. Too bad you lost. Invest at your own risk.

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Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
Neal would never speak out against Financial Attunement. He doesn’t believe in the blame game. If you hear his podcasts where he talks about his failures, he always brings up these projects. To him, everything is a learning experience so you will never hear a bad word about Financial Attunement from him, ever. And yes, he is still involved in one project from Financial Attunement. The project is still running, so his obligations haven’t changed. Leaving the company does not change his responsibilities for past projects, only future ones.
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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Quote from @Eric Bleau:

Neal would never speak out against Financial Attunement. He doesn’t believe in the blame game. If you hear his podcasts where he talks about his failures, he always brings up these projects. To him, everything is a learning experience so you will never hear a bad word about Financial Attunement from him, ever. And yes, he is still involved in one project from Financial Attunement. The project is still running, so his obligations haven’t changed. Leaving the company does not change his responsibilities for past projects, only future ones.
Interesting. We are just bring up the same failures here for all to form their own opinion. i think its good to know full picture then decide. I do not want to pay tution for someone else's learning experience. I have decided first loss, best loss.
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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Had an interesting update on Buffalo on rails project. Neal and Financial Attunement have both quit the project. Probably they do not want to be answerable to investors they roped in first place with their charm and wild promises of high returns. I am still paying for Mr. Neals learning experience. Anyone investing now should pray that it does not become a learning experience for Neal Bawa. If it does, the investor will have a learning experience of their own that they should listen to people having negative reviews.
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Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
Quote from @Harish V.:

Had an interesting update on Buffalo on rails project. Neal and Financial Attunement have both quit the project. Probably they do not want to be answerable to investors they roped in first place with their charm and wild promises of high returns. I am still paying for Mr. Neals learning experience. Anyone investing now should pray that it does not become a learning experience for Neal Bawa. If it does, the investor will have a learning experience of their own that they should listen to people having negative reviews.

Harish varma,

You are a vicious troll. You take every piece of information and spin it one way. Your last post was the most one sided of all. Neal Bawa withdrew from the Buffalo project last night (only as a general partner) to accommodate a new partner. This partner, McGuire is a heavy hitter, is in an excellent position to move the project forward, and they spent an hour on zoom last night (Feb 21, 2022) explaining why they are investing $7-8 Million of their money into the project. You were present for the entire session, so you know this.

However, as McGuire came in, the general partner pie shrank. Since Dave Freeman is the lead partner in the project, Neal gave $600K worth of his profit shares to Dave Freeman (both as a thank you for Dave, who spent over a year getting McGuire and their money in) and as an incentive for Dave to continue spending time on the project, despite the general partner pie shrinking. Further, Neal also announced last night that he is making a limited partner investment (cash injection) into the project, even as he gave away all of his general partner shares to a deserving partner. Neal and Dave also communicated that Neal is hard at work on a key part of the project, which will take several months to complete.

Anyone on this thread should note that Harish Varma is not credible. He is only interested in making one-sided statements, not in representing both sides of the picture. While there is good reason for the frustration caused by the delay in this project, last night, proof was provided that the project is moving forward in form of the presence of a successful and powerful local company joining the project. Note that Harish neglected to mention any of this. Its very likely that all subsequent posts will be equally one-sided.
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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Your nasty tone does not deserve a response.
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Chad Rappaport
Member since 2022 · 3 posts · 4 votes
4y
I just read on this thread that someone was told 3 weeks ago that the New Braunfels project was "sold out". Funny I was just invited to send in a $5k binder 10 minutes ago........
4 Reply
Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
Quote from @Chad Rappaport:

I just read on this thread that someone was told 3 weeks ago that the New Braunfels project was "sold out". Funny I was just invited to send in a $5k binder 10 minutes ago........

Chad, thanks for pointing this out. I don't know who said they were sold out, but I can assure you that at this time there are still buildings available.
0 Reply
Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
SEC FORM D - 12.6 M still to raise. Just filed Feb 8, 2022.
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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Park Canyon shows up in Exit list from Eric, not sure why they are still raising funds -
SEC FORM D

2M raised, 8M to go.

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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Quote from @Harish V.:

Park Canyon shows up in Exit list from Eric, not sure why they are still raising funds -
SEC FORM D

2M raised, 8M to go.

Found the reason, they have new project on site

PARK CANYON (ROUND 2) · DALTON, GA
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William Woodring
Member since 2018 · 5 posts · 10 votes
4y
I deposited an earnest money agreement on two properties at the San Antonio project. When I said I would have my own financing, I was told they needed to vet my financing plans even though I am an accredited invested with a preappoval from an legitimate company. They refused to accept my terms and said I would need to put down 30% versus the traditional 80/20 with conventional terms. They returned my earnest money without an explanation. I was also told they would need my 30% in the next 30 days even though construction would not start for a year. I couldn’t get a construction schedule or any actual facts on when my property was going to be built. So basically, I am loaning Grocapitus $500,000 for a year without any idea when my property was going yo be completed. What investor would do that??

2 Reply
Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
Quote from @Harish V.:

SEC FORM D - 12.6 M still to raise. Just filed Feb 8, 2022.
New Braunfels is a for sale fourplex project. I don't understand your point? Why would you think there is an SEC issue, given we are selling fourplexes?
0 Reply
Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
Quote from @Harish V.:

Quote from @Harish V.:

Park Canyon shows up in Exit list from Eric, not sure why they are still raising funds -
SEC FORM D

2M raised, 8M to go.

Found the reason, they have new project on site

PARK CANYON (ROUND 2) · DALTON, GA
Hi Harish Verma,
We did exit Park Canyon, giving our investors 50% annual return. But since the market is so hot, while looking for another value-add project, we already had a project in Park Canyon. So upon sale, we had the option to match the highest and best offer, so we formed a new syndication and bought it back. We knew something that no buyer could possibly know. In addition to the 29 new units that we already had built (which doubled the value), we had rights to build 48 more units, and had city approval. Also, Dalton, GA is a great community that we have been very happy with, the project has the opportunity to do super value-add by adding additional units, and best of all, the former investors got the opportunity to 1031 the profits into the new project, which is extremely rare in the syndication industry. So in fact it was a win-win-win for everyone involved in the project.

Please note that the Park Canyon syndication is fully subscribed, and the overwhelming percentage of the money came from original investors. That’s the best compliment ever.

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William Woodring
Member since 2018 · 5 posts · 10 votes
4y
Quote from @Chad Rappaport:

I just read on this thread that someone was told 3 weeks ago that the New Braunfels project was "sold out". Funny I was just invited to send in a $5k binder 10 minutes ago........

Yes I invested back in Dec and was told the project was sold out. Then in Feb I was told I was no longer being considered as an investor and refunded my money without cause. I find the whole situation disturbing. I was an accredited investor with a letter and my own funding. I didn't like the terms presented and wanted to negotiate. I was told terms are non-negotiable. I wasn't feeling good about this project. The numbers look much better than reality. If the project was good, why are the "sales" people keep telling prospects that the project is just about sold out at every sales pitch? There are other issues which I have posted about previously. (no production schedule),( demanding 30% down before breaking grown and holding those funds for almost a year before construction)
2 Reply
Eric Bleau
Rental Property Investor · Sacramento, CA · Member since 2017 · 26 posts · 12 votes
4y
William Woodring brings up very good points, so here is detailed context. Firstly, we have to grudgingly agree with William that 30% down payment was onerous. Our Fourplex 100% ownership strategy has evolved over time, and based on feedback from William and others, we now charge a 20% down payment, instead of 30%.

Secondly, we now pay the investor interest on the down payment, as a discount on the final price. These changes have been made in January 2022. Since the changes were made, demand for the product has roughly doubled.

With regards to actual demand vs ‘implied demand’, the demand for our fourplexes is actually very high. We have launched five fourplex projects, and of all the fourplexes in all of those projects that were offered, only two are available for sale in Feb 2022. So, over $40 Million of fourplexes were sold in the last 14 months. The typical project sells out in 30-45 days, though one of them took longer.

All of our projects have a detailed Purchase and Sale Agreement (PSA) that buyers sign with details on terms and construction timelines. Perhaps William did not review the entire document.

With regards to William’s comments about rosy financials, we have to disagree. I purchased a fourplex myself (Grocapitus did not give me a discount), and have seen projected rents spike by over $200 per month beyond what was projected). Later this year, as a bunch of Fourplexes from different projects deliver, I will post budgeted financials vs actuals, and also post multiple unedited reviews from the buyers. We can say with confidence that those buyers will not consider the financials rosy, but conservative.
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Seema Maheshwari
Member since 2022 · 1 post · 1 vote
4y
Eric, I haven’t seen you on any of Neal or Anna’s webinars. Are you a silent partner?
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William Woodring
Member since 2018 · 5 posts · 10 votes
4y
Update on my post
As pointed out, the initial terms on my contract in Oct 2021 were beyond industry standards. It took a posting from me fir Grocapitus to make adjustments?? What’s that say about Grocapitus and their business model.
Grocapitus had an ephipany about industry standards?

So I would assume the San Antonio project is sold out if the terms have been adjusted to be more reasonable. However, as of June 2022, I see these properties are still being advertised. When I made my earnest money deposit, in Oct, I was told production would be in 2022 and completed by 2023. That was the only production schedule I was given even though I specifically earmarked the buildings I was purchasing in the project. I was told ( I better hurry, the project is just about sold out)

As of June, the project is still selling and now the timeline has moved to the right by another year, 2023-2024. If I hadn’t got out of the project, I would have tied up $500,000 for potentially 3 years.

Industry standards are currently between earnest money to ownership is 12 months.
Grocapitus is saying it’s ok to tie up hundreds of thousands of $$ for 3 years. Incredibly poor business deal.
As for the increase in rental potential on the properties. That means nothing until the properties are sold and rented. Even with a bump of $200 in rent. That will most probably be offset by an increase in new mortgage costs and increased rates.
It seems there are still issues with the San Antonio project. I am glad I walked away. It wasn’t a good deal and since the project production keeps moving to the right and there seems to be an unlimited number of properties available, one has to wonder what’s going on. I find that amusing as I was told I was buying the last “two” buildings and I better hurry or they would be gone. I would caution any investor to beware and run the numbers independently of the spreadsheets provided by the Grocapitus sales team.

3 Reply
Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Quote from @William Woodring:

Update on my post
As pointed out, the initial terms on my contract in Oct 2021 were beyond industry standards. It took a posting from me fir Grocapitus to make adjustments?? What’s that say about Grocapitus and their business model.
Grocapitus had an ephipany about industry standards?

So I would assume the San Antonio project is sold out if the terms have been adjusted to be more reasonable. However, as of June 2022, I see these properties are still being advertised. When I made my earnest money deposit, in Oct, I was told production would be in 2022 and completed by 2023. That was the only production schedule I was given even though I specifically earmarked the buildings I was purchasing in the project. I was told ( I better hurry, the project is just about sold out)

As of June, the project is still selling and now the timeline has moved to the right by another year, 2023-2024. If I hadn’t got out of the project, I would have tied up $500,000 for potentially 3 years.

Industry standards are currently between earnest money to ownership is 12 months.
Grocapitus is saying it’s ok to tie up hundreds of thousands of $$ for 3 years. Incredibly poor business deal.
As for the increase in rental potential on the properties. That means nothing until the properties are sold and rented. Even with a bump of $200 in rent. That will most probably be offset by an increase in new mortgage costs and increased rates.
It seems there are still issues with the San Antonio project. I am glad I walked away. It wasn’t a good deal and since the project production keeps moving to the right and there seems to be an unlimited number of properties available, one has to wonder what’s going on. I find that amusing as I was told I was buying the last “two” buildings and I better hurry or they would be gone. I would caution any investor to beware and run the numbers independently of the spreadsheets provided by the Grocapitus sales team.

I am surprised that they let you out when you had paid the earnest money. I do wish everyone else does have better experience with Mr. Neal and company than I had. Wish anyone who invested with them best of luck. They seem to indicate now their portfolio is 1B from earlier 500M. So they have grown quite a bit.
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Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
BTW the properties are listed here on Bigger pockets:
https://www.biggerpockets.com/...
0 Reply
Harish V.
Investor · Fremont, CA · Member since 2015 · 211 posts · 125 votes
4y
Quote from @Harish V.:

BTW the properties are listed here on Bigger pockets:
https://www.biggerpockets.com/...

I will like to know how people make money buying at 5.62% cap rate when 30yr mortgage is hitting 6%.
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Al D.
Investor · San Francisco, CA · Member since 2017 · 303 posts · 327 votes
4y
@Harish Verma You make a fair point about interest rates of late for comparing one investment against another based on the sellers’ stated cap rates. Since any potential mortgage is not calculated into the cap rate, I rarely even care to count on the advertised cap rate. It’s more just for comparison to me. Tho, when one really stands out from a typical local norm at a given time in that market, it may help me to gauge the overall truthiness of the seller/syndicator when it comes to their other claims.
1 Reply
Bob Smith
Real Estate Investor · Des Moines, IA · Member since 2017 · 41 posts · 14 votes
4y
This thread definitely gives me pause. I wish there was more positive feedback from investors. :(
2 Reply
Kaustubh Johri
Investor · Atlanta GA · Member since 2018 · 188 posts · 71 votes
4y
Whats the latest on Grocapitus ? Is there still any steam left in the company or is just another marketing gimmick..like Morris Invest. Google Morris Invest and you will be shocked.
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