Equity Build Finance, LLC

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Equity Build Finance, LLC

George Lekas
Investor · Montello, WI · Member since 2012 · 8 posts · 4 votes

I was just wondering if anyone has had any dealings with this company?  They promise 12-15% returns, depending on how much you invest with them.  They always seem to be offering properties in bad neighborhoods, mostly in Chicago, and claim to have never had a foreclosure or default in over 600 transactions.  When I asked about specifics on one of their offerings in December, I got an e-mail saying that their "finance guy" would get back to me with details.  I still haven't heard from him.

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Gregory Vallenari
Investor · Denton, TX · Member since 2012 · 2 posts · 3 votes
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Yes, I have two investments with them that are both nail biters.   

My opinions only:   

My gut feel is that they're above board and not a scam.   But operationally they seem to have some challenges.    Communication is less than desired as projects progress and especially when they get into trouble.   While it does seem like they're working on that aspect, I don't feel that they understand what good communication to their investors should look like.   The folks they put in place to communicate to investors are fairly new and don't know a lot of what's going on.   

One equity investment i have with them in Chicago has taken some bad turns and I may or may not see all my principal back.    They had a conference call to explain what had happened and what the plan was.   The explanations seemed reasonable but no communication for a couple of months after the call.   Then i pushed for a status and found out that plans laid out in the conference call had fallen apart - yet with no investor update.     Ongoing communication (where we are, what's next and what are the milestones) is lacking and only comes partially when i really push for details.

Another lending investment i have with them in Puerto Rico is supposed to complete in few months but has already been delayed twice.    The explanations seem reasonable but communication has not been good, though they did finally have a conference call recently.

I understand from the Equity Build Finance (frequent) sales emails that none of their deals have ever lost money but i am obviously a little skeptical (but hopeful).    

I would love to hear of other's experiences - successful or otherwise. 

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  • Shaun Cohen
    Real Estate Investor · Plano, TX · Member since 2009 · 21 posts · 2 votes
    11y

    George,

    My apologies that you weren't responded to.  I brought this to our sales manager and he will have someone reach out to you.  I found your email from December and it apparently got overlooked.  Someone will reach out to you and work through your questions with you.

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  • Barry Armstrong
    Forest, VA · Member since 2013 · 8 posts · 1 vote
    11y

    Be prepared for delayed transactions and very little information. I have three separate deals and all I am told is they are delayed -- which is creating a real mess for me.  Lots of information and hand holding on the front end, then it's a nail biter. 

    1Reply
  • Cliff Mccue
    Investor · Chicago, IL · Member since 2012 · 111 posts · 73 votes
    11y

    @Barry Armstrong

    That stinks to hear.  These situations are difficult to deal with.  Are you at least receiving your interest checks?  The rumor mill here in chicago is certainly churning here about these guys.  Feel free to PM if you want to talk about options.

    0Reply
  • Brock Adams
    Chapin, SC · Member since 2013 · 73 posts · 19 votes
    11y

    I have attended the webinars and the information is very informative.  I have not pulled the trigger and made an investment yet because I am still vetting the company, the real estate and feedback from others. I have looked at other companies that offer the same type of investment but on residential properties and the money is not tied up for 2yrs . Keep researching and maybe someone in that local market may provide more information.

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  • Gregory Vallenari
    Investor · Denton, TX · Member since 2012 · 2 posts · 3 votes
    11y

    Yes, I have two investments with them that are both nail biters.   

    My opinions only:   

    My gut feel is that they're above board and not a scam.   But operationally they seem to have some challenges.    Communication is less than desired as projects progress and especially when they get into trouble.   While it does seem like they're working on that aspect, I don't feel that they understand what good communication to their investors should look like.   The folks they put in place to communicate to investors are fairly new and don't know a lot of what's going on.   

    One equity investment i have with them in Chicago has taken some bad turns and I may or may not see all my principal back.    They had a conference call to explain what had happened and what the plan was.   The explanations seemed reasonable but no communication for a couple of months after the call.   Then i pushed for a status and found out that plans laid out in the conference call had fallen apart - yet with no investor update.     Ongoing communication (where we are, what's next and what are the milestones) is lacking and only comes partially when i really push for details.

    Another lending investment i have with them in Puerto Rico is supposed to complete in few months but has already been delayed twice.    The explanations seem reasonable but communication has not been good, though they did finally have a conference call recently.

    I understand from the Equity Build Finance (frequent) sales emails that none of their deals have ever lost money but i am obviously a little skeptical (but hopeful).    

    I would love to hear of other's experiences - successful or otherwise. 

    3Reply
  • John Weidner
    Chicago, IL · Member since 2014 · 710 posts · 200 votes
    11y

    There used to be a guy on here that posted quite frequently. 

    Looking at their website it doesn't appear there is any update on SF Flips since Sep 14. That should be a red flag. 

    What is the property address in Chicago?

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  • George Lekas
    OP
    Investor · Montello, WI · Member since 2012 · 8 posts · 4 votes
    11y

    Hi, John,

           They offered investments in 2 properties late last year- 5201 West Washington Boulevard, and 7752 South Muskegon.  The one on Muskegon had sold for about half of what their valuation was, less than a year earlier.  When I pointed that out and asked if they were saying that a million dollars in improvements had been made on that property, there was no response.  I was initially interested in them because of the interest rate- I only pay my investors 8%!  My opinion , and only my opinion, is that, based on my experience with their team, is that a person should proceed with caution, and only after close scrutiny of their offerings.  I echo several other posters in wondering if anyone here has had any success with these folks?

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  • Mark Whittlesey
    Real Estate Investor · Encinitas, CA · Member since 2013 · 225 posts · 91 votes
    11y

    I can add to this. I currently have 3 investments with them (as a lender not as a purchaser). To date all the interest payments have been made. One property had previously paid off and I re-invested the funds.

    Their institutional controls (especially as it relates to contractor payments) in the past were VERY bad. This led to serious cash losses. To date, I am not aware that any of those losses have flown down to the lender/investors. But that is a real possibility and may require moving the note to another property. Frankly, it will require that the buyers step up; EquityBuild alone cannot make this happen. Supposedly, these controls were fixed/addressed.

    On one of my deals, it is NOT clear that the collateral alone would be enough to make the investors whole ie it is very possible that the property is under-water especially given that there are substantial mechanics liens attached to the property. (The standard hard money LTV does not seem to be adhered to.. at least on reasonable ARV valuations.)

    I have another deal which is supposedly in similar but not as dire straits and one that supposedly is performing.

    The communication has not much improved. The client reps seem to be a revolving door. I have had around a half dozen in roughly 2 years. The reps ARE good about getting back to the investors but the reps typically do not have any detailed information. The single point of contact is supposed to have that information but it seems that he often has to go to someone else in the company to get the requested information. 

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  • Kim Blatt
    Wholesaler · Cincinnati, OH · Member since 2015 · 2 posts · 0 votes
    10y

    Hello All. I am having a second conversation with Equity Build this afternoon. I will not be investing today but would love to hear some updates. Thumbs Up or Down on investor communication and more importantly, did you get your original investment and promised return?

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  • Darrell Odum
    Appraiser · Myrtle Beach, SC · Member since 2015 · 9 posts · 1 vote
    10y

    I am thinking of investing with them but it sounds " too good to be true." 

    I would like more information from people who have actually invested with them.   One concern is that they don't seem to be using independent appraisers opinion of value.  They may not be as objective as necessary in their valuations.  Please let us know if you have had actual experience with them. 

    0Reply
  • Cliff Mccue
    Investor · Chicago, IL · Member since 2012 · 111 posts · 73 votes
    10y

    @darrell odem I can't speak their ability to repay an investor.  Here in Chicago they are defendants in a fair amount of housing court cases.  The amount of cases would make me worried about the product.

    0Reply
  • Cliff Mccue
    Investor · Chicago, IL · Member since 2012 · 111 posts · 73 votes
    10y

    @Darrell Odum

    0Reply
  • John Allred
    Lender · Tulsa, OK · Member since 2016 · 5 posts · 0 votes
    10y

    Your right, Darrell.  We don't pay for commercial appraisals prior to purchase and I doubt you would either if you dealt in distressed property that you fully intend to rehab.  The meaningful appraisal worth paying for is the one that reflects the added value of a significant rehab, and once you have it--the first appraisal is rendered a meaningless waste of money.  And, since our owner, Jerry Cohen, has been doing this since 1986, he really has no excuse for not knowing how to valuate a property at this point.  Fortunately, I don't think it's a problem for him.

    0Reply
  • Vasso V.
    Atlanta, GA · Member since 2015 · 1 post · 0 votes
    10y

    Is there any consensus on Equity Build finance? I spoke to them and was told two deals went south but they make lenders whole.

    In real estate, not all deals work as planned. But I find it hard to believe they are in business this long if they are not able to deliver.

    0Reply
  • Gary Burnham Jr.
    Real Estate Investor · South Windsor, CT · Member since 2012 · 12 posts · 6 votes
    10y

    I started investing my solo401K with Equity Build Finance since June 2013.   I have received every interest payment to date and am looking forward to continuing a successful investing relationship with Equity Build.  To feel more comfortable with the process of investing with Equity Build its important you understand how bridge loans work, exactly how the process of commercial lending works, and how cash flowing property works.  It helps if you own property yourself collect rents and have gone through the refi process yourself.  This will help an investor become more educated which will help them make a better decision.  Since working with EB for the past 3 years I can say that they have made an honest commitment to improve customer support and communication and any adversity they have encountered they have handled with integrity.  My real estate consultant that has been assigned to me has done a fantastic job of working with me and answering any questions I have had.   If anyone is thinking about investing I would be happy to give you my Equity Build Real Estate Consultants name.  He is very knowledgeable and gets back to me asap.   Like I stated earlier 36 months 0 payments missed.  

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Gary Burnham Jr.  have you ever gotten your principal back.?

    anyone can pay interest payments.

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  • Mark Whittlesey
    Real Estate Investor · Encinitas, CA · Member since 2013 · 225 posts · 91 votes
    10y

    Yes, I have gotten principal back twice. I am still waiting on 2 principal payments. 

    One is due in December. One was technically due April 1 but the note was extended. (I chose NOT to extend and was put on a "buyout" list so we will see what happens. I believe the note was extended till August.)

    My guess would be more than 2 deals south unless it just so happened that I was invested in both of them because 2 of my... 5??? deals went south.  This was an issue of terrible oversight of a crooked contractor.

    I was made whole by the buyer on one (with the stipulation that I roll over the funds into another of her deals.) I do believe that EBF was making the interest payments themselves after the note was "extended". I believe that is happening with my current "gone south" deal..

    Speaking to what Gary said.. yes, my real estate consultant is great too. The problem is that he always has to confer with someone to get me answers. He has no AP answers so he has to go to someone for that. And in terms of deals, the "go to guy" that my real estate consultant can go to.. also does not usually have the answers. So the communication can still use more ramp up.

    Hope this helps.


    Mark


    1Reply
  • Dee Kirkbride
    Investor · Delray Beach, FL · Member since 2016 · 6 posts · 0 votes
    10y

    How can I find out aboutlEquity Build and their housing court cases? i am thinking of investing with them but i do not want any trouble.

    0Reply
  • James Ploeger
    Investor · Gilbert, AZ · Member since 2016 · 2 posts · 1 vote
    10y

    I began receiving emails from EquityBuild probably 4 years ago.  Decided to take the plunge just over a year ago as a lender.  Was invested in 3 properties.  One has been closed out with the principle and interest paid as expected.  Another is still ongoing and I'm getting paid the interest per contract monthly - no misses to date for 13 months.  The last property was involved in a short sale in April.  The notification about this property came as a surprise; however, Equity Build is going the extra mile to ensure I get back what is due me.  Net result is that I've agreed to another deal that should close in June.

    I think growing pains have occurred.  Communication was minimal a year ago, much better now. 

    1Reply
  • Dee Kirkbride
    Investor · Delray Beach, FL · Member since 2016 · 6 posts · 0 votes
    10y

    Hi James, thanks for your candid information about Equity Build. I appreciate all the details and they will help me with my decision. I am new to this forum so am very pleased to get a response so timely. I have been talking to Equity Build and they have been timely with their responses.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Cliff Mccue  Hey Cliff hope your doing well.

    I had one investor from Davis CA send me his documents for my review. as he was being asked to take no interest if he wanted cashed out etc.

    pretty obvious that public records show multiple assignments on one property IE new investors paying off old..

    All I can say if you have work outs In the last 3 years then your company is not doing very well even dumb newbie bumpkins are making money now.

    I had to foreclose personally on many equity build clients.. and I lost a ton of dough.

    this was before they moved to Chicago and I did their very first Chicago loans which 90% went TU and were defaulted on.  

    but that's public record.. the major issue I see with this thread is folks investing but talking about how this is not working and that is not working and if that's the case in the last 3 years you need to ask yourself how come.. etc. etc. I know why these folks invested promises of huge returns  and one thing Cliff I think you will agree and that is PIGS get slaughtered LOL..

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  • Cliff Mccue
    Investor · Chicago, IL · Member since 2012 · 111 posts · 73 votes
    10y

    @Jay Hinrichs

    Things are going great here.  If you have time the next time through Chicago, I'd love to catch up with you.

    I have seen this type of stuff frequently and I think it highlights poor business management.

    We are now in a culture, because of financialization that few people want to actually grow a business.  Generate revenues, which turn into profit, then reinvest those profits to generate more revenue and on and on.  Everyone is looking to tap the debt market or the equity market and who cares about profit, they are "gaining market share."  There are so many companies that think they can out run their loses by continuing to tap the financial markets.  I think it is very common in real estate because of the high reliance on leverage.  If I make 20% on the 100k I borrowed, well then I can easily do the same thing with $10million.  When you skip over those growth stages, you don't realize the unaccounted for expenses that went into making that original 20%.  You don't realize that yea you made 20k but you put in 300 hours to do it.  When you get to $10 million, all of a sudden you need to actually pay someone to do that work and you business model no longer works.

    That is why I think it is so important to do your due diligence on companies that you are going to lend to.  Hire a private investigator.  If you are willing to cut a check to someone for $100k, maybe you should do more than take their word for it or their "references" word for it.  But most people are too lazy to do that, so stuff like this continues to happen.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Cliff Mccue  from what I saw in the Chicago market you can ( or I suppose it legal I know it is in CA but it is not in Oregon) is these investment are fractionalized interests in ONE mortgage note.

    So you now have people unknown to each other in a common enterprise.. ( which always leads attorneys to securities issues)... so with this set up you can simply bring in new money via collateral assignments very very easy to do functionally.. and most investors do not have the experience or knowledge to even understand what they are doing..

    So this leads to mortgages were if you have someone who is unhappy you simply replace them. and can do that with out retiring the mortgage.

    So what happens when some of these folks talk about being repaid the asset may never have been sold simply some other investor came in and took their position, so to the investor its just feels like they got paid off because that's what happened to them...

    Anyone wishing to invest this way and wants to fully understand this model.. should google Fractionalized deeds of trust California as we have used this model for the last 100 years..

    Most note investors and those that buy notes and know the note business want to buy 100% of the interest in the note for the following reason.

    1. total control

    2. if it does go belly up.. it takes ALL of the beneficiaries of the Note to sign to foreclose. and this in my experience in CA fractionalized notes is a huge issue.. when you have a hold out.. you can be stuck in limbo.

    The state of California regulates mortgage lending via RE brokers licenses or NMLS.. there are specific disclosures for fractionalized TD's in the state disclosure docs.. which explain this..

    So anyway that's what I know.. I will be out your way this summer and will ping you !

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  • Aron D.
    Rental Property Investor · San Diego, CA · Member since 2008 · 89 posts · 65 votes
    10y
    Jay, How can I get in touch with you? I had a question regarding a company in OR. Thanks!
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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Aron D.  send me a pm .. I don't put my email on BP anymore because of all the riff raff contactging me and the phishing going on

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