What's going on with Realty Shares

Buying & Selling Real Estate
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What's going on with Realty Shares

Michael McDonald
Member since 2018 · 19 posts · 4 votes

Got an email from Realty Shares today was wondering if anyone had any insight or thoughts.  I am copying the notification.

An important message from RealtyShares

To our platform investors and operating partners:

Five years ago, RealtyShares was founded with a mission to connect capital to opportunity. With over $870 million invested across more than 1,100 projects, we have built one of the top online real estate investment platforms. We’re helping investors meet their financial goals and deploying capital to real estate operating companies to execute value-add and development strategies for properties across the U.S.

As an early stage company, we have relied upon venture capital to fund our operations. Over the past six months, RealtyShares aggressively pursued a number of financing options to continue growing the business. Unfortunately, despite our best efforts, we were unable to secure additional capital. As a result, we will not offer new investments or accept new investors on the RealtyShares platform.

From this point forward, RealtyShares’ focus will be servicing our existing investors and approximately $400 million of assets under management. This transition will have no impact on the underlying real estate investments. Investments will continue to be managed and distributions will continue to be made. Investors will continue to receive asset management updates and year-end tax information.

We are committed to serving our existing investors and sponsors and have a team dedicated to supporting our ongoing operations.

The RealtyShares Team

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
7y

Id be a little nervous from an email like that if I had assets with them

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  • David D'Ambrosio
    Investor · Brielle, NJ · Member since 2015 · 121 posts · 21 votes
    7y

    Just had my principal returned to my account. Phew!!

    Hopefully I will get the remaining monies back as well

    0Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    That's great to hear. I hope they continue to follow through with all the deals.

    0Reply
  • Johnathan Norman
    Seattle, WA · Member since 2014 · 56 posts · 45 votes
    7y

    I had a loan with them that has been in default and it should be paid off by now. They shut down the phone line and so far haven't responded to emails. I'm really curious how many of their loans went into default , i know of 3 other deals plus mine.

    0Reply
  • Brian Serina
    Commercial Real Estate Broker · Sacramento, CA · Member since 2015 · 102 posts · 50 votes
    7y

    I had a small handful of minimum investments with them and by early December all went quiet and no activity is showing.  They have completely quit communicating with their ‘investors.’  I wonder if it is the same with the sponsers (not communicating) which would not bode well if that is the case.

    0Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    I am in the same situation as you Brian. But the minimum investments add up fast. The question is what recourse is there if any and how does one attempt it as a small time investor.

    0Reply
  • David D'Ambrosio
    Investor · Brielle, NJ · Member since 2015 · 121 posts · 21 votes
    7y

    I have one defaulted loan. One that is supposed to be repossessed and one that wS supposed to be closed in November but have not gotten any updates. I also have two outstanding performing notes that have continued to pay.  No updates on anything no idea what’s going on, a total of 60k if my retirement money tied up with them

    0Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    I have 4 minimum investments with. 3 have continued to pay at least through December the 4th one I hear nothing about it.

    0Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    It also seems like there are more late 30/60's on peer street. Those don't hurt as much since you could do 1000 minimums

    0Reply
  • Steve Vaughan
    Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    7y

    Curious outsider question.

    What is the benefit of putting relatively small but hard-earned dollars you can't leverage into an investment like this? 

    Is the return potential so much greater than a publicly traded REIT for example? Higher than an easy 8%?

    Is it because you can use your SDIRA?  Can't depreciate in those anyway. 

    Thanks for any insight.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Steve Vaughan:

    Curious outsider question.

    What is the benefit of putting relatively small but hard-earned dollars you can't leverage into an investment like this? 

    Is the return potential so much greater than a publicly traded REIT for example? Higher than an easy 8%?

    Is it because you can use your SDIRA?  Can't depreciate in those anyway. 

    Thanks for any insight.

    shinny object herd mentality and small dollar entry.. when RS was in their prime they would subscribe a debt offering in a matter of minutes.. so if you wanted in you had to jump in.. with really no due diligence. it feed on itself.. However i would think its the same mind set Steve on why people invest in D class in the mid west or rust belts trying to get that 12% return or more on a rental.. not at all understanding the market prices for risk.. so they take on the risk for a perceived greater return. I mean the folks in CA which are many could have easily invested with say Norris group in LA and made 7% to 9% and be with one of the premier HML in the country.

    and every city on the west coast has there version. but it was not the new latest and greatest that crowd funding allure created. Those guys are not on line and make investing as easy as a click of the mouse.. 

    And you can see by the replys there once you put small dollars into deals with a bunch of other small investments or investors.. when they go dark your really out of any type of control.. and you just have to hope for the best..  Some of these are going to pay off and some are going to lose any return and some will lose significant principal..  Who ever takes over will fee them to death.. seen that happen.

    And they have to small of an investment to hire legal council.. that will cost more than what they invested.  So you make good points about why these folks invest 1k to 5k ...  I am on a few of the facebook private crowdfunding sites.. and I learned like Ground floor will put 100  1k investors into one loan.. that to me is insane.

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  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    Jay, your absolutely right. Was looking to put some money to work while I was building my personal house then would access later for more rentals. This is another one of those life lessons and it seems an education is never free, some types are just more expensive.

    0Reply
  • Brian Serina
    Commercial Real Estate Broker · Sacramento, CA · Member since 2015 · 102 posts · 50 votes
    7y
    Originally posted by @Michael McDonald:

    I am in the same situation as you Brian. But the minimum investments add up fast. The question is what recourse is there if any and how does one attempt it as a small time investor.

     At this point it is a wait and see.  I mostly did only debt and preferred with RS.  The one time I did an equity deal with them it went sour rather quickly.  The one debt deal that I have remaining was a on a small house in Hawaii paying about 9% is now way past due but still making payments...until December.  I don’t believe all the sponsers have quit paying - I think it is an RS issue (at least I hope so) and it gets resolved (vs them having to chase down sponsers).   I actually had a good track record with them over the last three years until I went into that one equity deal (and I only did that since all the debt and preferred offerings dried up).  So, not sure what is going to happen now but I think it is an RS issue.

    Also, just a side note and my two cents worth going forward. Crowd funding is becoming 99% the sponser and 1% the deal. On that one deal that went sideways, it was basically they overpaid in a bad neighborhood - it is as simple as that. The pro forma looked good, pics looked wonderful, all my questions were answered, they were going to turn this thing around, make gobs of money, and yes they were quite confident they could achieve an IRR of 22%+, something like that. BS. In the end they were a C- grade sponser that didn't due their due diligence (that we were relying on) and provided comps that really were not. I am still a big believer in CF but the dark side is there are a lot of so called sponsers that should be avoided and do not have their investors best interest. I hope RS plays out well and winds down in a professional and ethical way that allows their investors to recoup their money and limits their losses. It's still early.

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    7y

    Consolidation in the crowded CF space. With everyone trying to be the number one cause there can only be number one.

    Still I don't like how you don't know the operator and I would prefer to find operators and deals on my own.

    0Reply
  • Brian Serina
    Commercial Real Estate Broker · Sacramento, CA · Member since 2015 · 102 posts · 50 votes
    7y
    Originally posted by @Michael McDonald:

    I am in the same situation as you Brian. But the minimum investments add up fast. The question is what recourse is there if any and how does one attempt it as a small time investor.

     You must have seen some activity recently?  I think they were late in paying/posting Oct and Nov activity.  One deal that was supposed to be paid off awhile ago was along with all the interest that was due.  Just a fyi.

    0Reply
  • Michael Pozsgay
    Member since 2019 · 2 posts · 0 votes
    7y

    Curious if anyone has had any payouts from RS lately? My last was on 12/7/18 from a debt deal that was otherwise paying smoothly. At this point I suspect an issue with the funds getting through RS. In general, also wondering what recourse one might have assuming RS is out of the picture entirely, given that investors still own a portion of the underlying LLC.

    0Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    I have the same situation. My payments were consistent until January. Was trying to be patient and wait and see. Maybe they are in transition to a 3rd party taking over?

    When I called it directed me to email and haven't heard anything.

    0Reply
  • Account Closed
    Lender · Pensacola, FL · Member since 2017 · 658 posts · 626 votes
    7y
    Originally posted by @Steve Vaughan:

    What is the benefit of putting relatively small but hard-earned dollars you can't leverage into an investment like this? 

    The benefit is diversification. I invest in global businesses (including real estate) with my brokerage account. Thanks to crowdfunding, I can now diversify a small percentage of my capital into local businesses and alternative assets.

    I don't use margin (leverage) when I invest in stocks. Direct real estate permits leverage and depreciation, but it's also more work ("there's no free lunch"). If I don't want to make the buy-sell and property management decisions in direct real estate myself, I need to know how to hire (and fire) competent managers to do these tasks for me.

    Crowdfunding is new and unproven, so I "toe dip" ("test drive" or "pilot trade"). I limit my risk to $1,000 per offering. Winning or losing isn't going to move the needle on my net worth either way. But I will learn something, just as I would learn something paying tuition to a college or losing money with an investment.

    I've read where blockchain is coming to real estate, but I haven't had a chance to delve into it yet. Congress is also working on Crowdfund 3.0, which is a collection of bills to further deregulate the securities market (they passed the House last year with strong bipartisan support, but didn't make it through the Senate). If you thrive on change, it's an exciting time to be alive.

    1Reply
  • Aftab Qamar
    Mishawaka, IN · Member since 2018 · 4 posts · 0 votes
    7y

    @Michael McDonald

    Same thing with me. 2 senior debt deals with them. No payments. No feedback on phone or emails. 35k stuck. Will I loose all the money? I am thinking about flying down to SF and visit their office. Or should I try contacting the sponsors myself?

    0Reply
  • Aftab Qamar
    Mishawaka, IN · Member since 2018 · 4 posts · 0 votes
    7y

    @Michael Pozsgay

    Same thing. Last payment 12/7 and since then zero contact or feedback.

    0Reply
  • Jim M.
    Real Estate Investor · Manahawkin, NJ · Member since 2016 · 25 posts · 7 votes
    7y

    I'm still getting payments (Jan 8 and Jan 11, two different investments).  I think the key is, if the sponsor is scrupulous and does the right thing, you'll keep getting your payments.  But if they decide to default, don't count on RS to go after them on your behalf as they would have in the past.

    2Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    I finally got my distributions for December. That's good but they were really slow this month

    0Reply
  • Judy Cook
    Member since 2019 · 1 post · 0 votes
    7y

    We have the same situation. No communication. One property stopped paying, they say it is in foreclosure, but from the photos on realtor. com, the property looks renovated and nice. Distributions in January were very poor. How can we all get together to form a group to get information on how they are handling it now?

    This site does not allow for people to be able to contact one another by email, phone or name....

    0Reply
  • Brian Serina
    Commercial Real Estate Broker · Sacramento, CA · Member since 2015 · 102 posts · 50 votes
    7y
    Originally posted by @Aftab Qamar:

    @Michael McDonald

    Same thing with me. 2 senior debt deals with them. No payments. No feedback on phone or emails. 35k stuck. Will I loose all the money? I am thinking about flying down to SF and visit their office. Or should I try contacting the sponsors myself?

     If you happen to visit their office, let us know.  That would be interesting but probably not as productive as you would want it to be.

    0Reply
  • Michael McDonald
    OP
    Member since 2018 · 19 posts · 4 votes
    7y

    From what I have been reading on on financial samurai a third party is taking over and that's the reason for delayed payments. I am not trying to promote another site but there is a lot of comment activity regarding RS. 

    0Reply
  • Jim M.
    Real Estate Investor · Manahawkin, NJ · Member since 2016 · 25 posts · 7 votes
    7y

    There seems to be talk that Realty Mogul is going to take over RS.  That would be a very good thing indeed.  Here's hoping the rumor pans out.

    0Reply
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