Syndicator Threatens LPs for Negative Comment about them On BP

17 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

2y

@Scott Trench

Great post and agree 100% as I have heard from LP’s as well who are afraid to call out GP’s and in some cases it’s the same people different LP’s are talking about - including some that they don’t even know what the GP invested in. But again afraid to call them out for getting sued.

What’s interesting in some of the recent posts is the “cut and paste” response from the sponsor actually looks worse for the sponsor.

Just goes to show how big a POS they are by threatening investors - now that’s assuming the LP is telling the truth but in some cases people who are experienced syndicators found the property was foreclosed and sold back to the lender - so curious what the sponsors defense is?

7e investments53 Reviews

10 Reply

Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

2y

Good for you, Scott! Let the truth come out.....

10 Reply

V.G JasonPro Member

Investor · Member since 2022 · 3k+ posts · 3k+ votes

2y

Great job. Call out these terrible acts by terrible folks.

The syndicator is just a letter off from the word Lame. Spill the beans, the world is too public.

Careful what tree you bark up, you'll get the wrong dog. Fold you like a pretzel if you try on it.

5 Reply

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

2y

Quote from @Scott Trench:

I don't know who needs to read this, but I feel it needs to be posted, publicly.

Recently the following happened:

- BP Member posts negative statement about syndicator to these forums, involving lost money, poor communication, etc.

- Syndicator is radio silent, apparently pretending not to notice dozens or hundreds of discussions about their business. Syndicator does not respond to thread.

- Syndicator intimidates investor (who just lost tens or hundreds of thousands of dollars investing with said syndicator) with legal threat

- Terrified LP, already having lost money, now is scared that wealthy syndicator could ruin them, and asks me to remove the forum post discussing the company

While I am in no position to verify the truth or falsity of claims made on these forums by LPs or GPs, to me, it seems like a special hell is emerging for investors where the following reality is possible:

- Invest tens or hundreds of thousands of dollars with a syndicator

- Lose all or most of this investment

- Get ghosted/poor communication from sponsor

- When they complain or ask for help, get threatened with legal action

I told the person with the original post the following:

- Name the syndicator, and I will publicly call them out for their threat, if they confirm who it is. I will invite the syndicator to confirm or deny the threat publicly. The member who messaged me has not confirmed who it was and named two people in their post. Otherwise, I'd be naming them right now.

- If the syndicator actually sues this member, we will make the litigation a headline issue in every major BiggerPockets content channel, including YouTube, Blog, Podcast, and these forums. We will cover the story in detail, with regular updates, through to resolution.

After all, Investors need to know which sponsors sue their own investors after allegedly losing their money and ghosting them.

- If the OP is lying, we will expose that and call out the syndicator's innocence, of course.

- If the OP is generally telling the truth, we will expose the syndicator's performance and behavior in threatening and suing their own investor as far and wide as we possibly can. We will evaluate their portfolio, estimating the purchase price and current value of every deal they've done from the beginning of time. We will research occupancy rates, and report on outcomes.

I am disgusted by the accusation, if true, made by this recent member, and while this is the most egregious situation to date, it's part of a disturbing pattern. The power dynamic between GP and LP is out of control. I have received multiple DMs from terrified members intimidated by wealthy sponsors, asking them to pull down their forum posts, even though they claim they posted truthful information.

We will rectify that power dynamic.

Maybe some GPs can intimidate their own LPs in private. But, not here on BiggerPockets. If you do that, we will come after you.

Syndicators - by all means, defend your reputation and set the record straight. If someone says something untrue about your business, respond and tell us what's really going on.

But, be warned, GPs - if you threaten your LPs for posting generally accurate negative stuff about you on BiggerPockets, we will make a public example of you for all to see.

Man, I think that post put reverence in people…

P.S maybe you can feature this post too, so it will sit at the top and get more eyeballs.

5 Reply

Chris Ja

Member since 2018 · 3 posts · 7 votes

2y

@Scott Trench I have nothing substantive to add here but having read a couple of those posts recently and seeing it play out in real time, I am glad you and the company/forum are taking a stand. The power differential is real and you are helping equalize the playing field

The reality is if you are an ethical and consistent strong performing syndicator/GP, you should be extra supportive of this. As the bad apples make everyone look bad and be presumed guilty of malfeasance, which ultimately means less investment $$$ and longer due diligence cycles and legal costs.

On the flip side to investors , other than the obvious advice to do your due diligence and stress testing seriously, also do the important work of self assessing your own true risk tolerance, ultimately defined by “are you comfortable losing it all” in a particular investment or asset category.

Kudos again BiggerPockets!

Mark F.

Rental Property Investor · Northern NJ · Member since 2019 · 672 posts · 677 votes

2y

Quote from @V.G Jason:

Great job. Call out these terrible acts by terrible folks.

The syndicator is just a letter off from the word Lame. Spill the beans, the world is too public.

Careful what tree you bark up, you'll get the wrong dog. Fold you like a pretzel if you try on it.

@Lane Kawaoka. Dunno if it tagged him but the guys at Drunk Real Estate (@J Scott) talked about this topic a bit in their latest podcast episode regarding LPs or random strangers calling out GPs on Twitter/X. There's a big difference from calling out scammers and fraudsters verses calling out failing syndications. I saw nothing wrong with what Giles said as he was shedding light on the lack of communication. If i was an investor in Lane's syndication and he pulled that, I sure as hell wouldn't be scared. Linked to his profile in this post as well.

I invested 5 figures into a failing note syndication (AHP) and theres a thread on BP. The sponsor has posted updates in it, albeit it bad ones. Glad Scott is addressing this head on and sorry to hear it came to this.

https://www.biggerpockets.com/users/wealthelevator

11 Reply

Ariel K.

TX · Member since 2018 · 154 posts · 92 votes

2y

@Mark F. As a LP, I want to know what is going on, so I applaud this. I don’t understand what happened to free speech. I didn’t see anything wrong with the post in question - just someone’s experience. I think any bad actors should absolutely be shamed and prevented from scamming people (not saying this happened here since we don’t know all sides). Thank you Scott for making this post!

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)

Brian BurkePro Member

Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes

2y

@Scott Trench good on you for taking this position. If the statements made in the post that seeded this are true, and what you said in this OP are true, this is one of the most disgusting things I’ve seen in my multiple decades in this industry, and gives the entire industry a black eye.

If this company pursues litigation, I would love to be on that jury. Foreperson: “your honor, let me get this straight, the plaintiff lost the defendant’s money, didn’t tell them, ignored their calls, and left their voice mail box full so no one could reach them, and now the plaintiff is asking me to award them damages because the defendant complained about it?” Good luck with that one—I doubt any syndicators would find a sympathetic jury in such a case.

Scott, you and I have debated the concept of “skin in the game” for years. I preached in “The Hands-Off Investor”, as well as on stage every year in my presentations at BPCON, that one of the strongest forms of “skin in the game” is “does the sponsor have a brand to protect?” I think this is the strongest example I’ve seen illustrating what I mean by that statement.

A sponsor that has a strong brand to protect (meaning not only are they well known, but have a positive track record and a long time in business) will go to the end of the earth to protect their investor’s interest. If things aren’t going well, they will clearly and transparently communicate with the investors. They will answer every question and respond quickly to every inquiry. If they got called out publicly, they would tell their side, even if that means admitting they messed up. They would do all this because if they didn’t, people would find out and then their career as a syndicator is over. Because of their strong brand, they couldn’t just resurface the next day with a new name and new logo and continue on, because people would know and not trust them. Weak brands can just change name and logo and start over, and most people wouldn’t know the difference.

21 Reply

Vessi Kapoulian

Investor · Los Angeles, CA · Member since 2020 · 102 posts · 94 votes

2y

Thank you, @Scott Trench! I feel many LPs are scared to share names out of fear of being sued for slander or defamation, even if such lawsuit threats may be unwarranted.

I feel really bad for the LP who simply created the post seeking for help and guidance (and as it turns out will lose their entire investment, which it appears the sponsor did not care to notify them about), only to be met with vindictive attitude vs. one of humility and compassion.

Chris John

Member since 2020 · 671 posts · 937 votes

2y

@Giles D.

@Lane Kawaoka

Not sure why these links aren't hyperlinked, but I'll try it anyway...

Gentlemen, I think I speak for a lot of people when I say that I'd LOVE to see the email exchange between you two that led to @Giles D. backtracking on the other thread. Either of you care to drop it?

Podcast Guest on Show #222

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

2y

Making mistakes or getting impacted by less controllable conditions happens to all of us. Those situations do not define us but how we respond to them does (taking responsibility and owning it vs running from it or placing onus on someone or something else).

7 Reply

Corby GoadeBusiness Member

Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes

2y

Quote from @Scott Trench:

I don't know who needs to read this, but I feel it needs to be posted, publicly.

Recently the following happened:

- BP Member posts negative statement about syndicator to these forums, involving lost money, poor communication, etc.

- Syndicator is radio silent, apparently pretending not to notice dozens or hundreds of discussions about their business. Syndicator does not respond to thread.

- Syndicator intimidates investor (who just lost tens or hundreds of thousands of dollars investing with said syndicator) with legal threat

- Terrified LP, already having lost money, now is scared that wealthy syndicator could ruin them, and asks me to remove the forum post discussing the company

While I am in no position to verify the truth or falsity of claims made on these forums by LPs or GPs, to me, it seems like a special hell is emerging for investors where the following reality is possible:

- Invest tens or hundreds of thousands of dollars with a syndicator

- Lose all or most of this investment

- Get ghosted/poor communication from sponsor

- When they complain or ask for help, get threatened with legal action

I told the person with the original post the following:

- Name the syndicator, and I will publicly call them out for their threat, if they confirm who it is. I will invite the syndicator to confirm or deny the threat publicly. The member who messaged me has not confirmed who it was and named two people in their post. Otherwise, I'd be naming them right now.

- If the syndicator actually sues this member, we will make the litigation a headline issue in every major BiggerPockets content channel, including YouTube, Blog, Podcast, and these forums. We will cover the story in detail, with regular updates, through to resolution.

After all, Investors need to know which sponsors sue their own investors after allegedly losing their money and ghosting them.

- If the OP is lying, we will expose that and call out the syndicator's innocence, of course.

- If the OP is generally telling the truth, we will expose the syndicator's performance and behavior in threatening and suing their own investor as far and wide as we possibly can. We will evaluate their portfolio, estimating the purchase price and current value of every deal they've done from the beginning of time. We will research occupancy rates, and report on outcomes.

I am disgusted by the accusation, if true, made by this recent member, and while this is the most egregious situation to date, it's part of a disturbing pattern. The power dynamic between GP and LP is out of control. I have received multiple DMs from terrified members intimidated by wealthy sponsors, asking them to pull down their forum posts, even though they claim they posted truthful information.

We will rectify that power dynamic.

Maybe some GPs can intimidate their own LPs in private. But, not here on BiggerPockets. If you do that, we will come after you.

Syndicators - by all means, defend your reputation and set the record straight. If someone says something untrue about your business, respond and tell us what's really going on.

But, be warned, GPs - if you threaten your LPs for posting generally accurate negative stuff about you on BiggerPockets, we will make a public example of you for all to see.

Awesome- good for you, Scott. Open and honest business practices, especially in real estate are so rare. Sure- it's absolutely possible for a legit syndicator to lose money on a deal, but there's no excuse for lack of communication, honesty or threats. True or not, good on you for requiring honesty and basic human decency.

2 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

2y

the exact same thing just happened on the Martel flip product. BP members complains on Bp

martel says they will refund money only if you print a retraction.. of course thats just what I heard but I read the post and it runs along the same lines as what we are talking about today

JLH Capital Partners51 Review

4 Reply

Nathan GesnerBusiness Member

Moderator

Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

2y

I'm all about protecting the innocent, but how do you know if the claims are true?

Even if the allegations are true, BP may get mixed up in a lawsuit they can't win against a syndicator with enough money to make you miserable. If the allegations are false, but BP propagates those allegations, then things can get really ugly.

I had a tenant sue me for stalking and harassment. She told a really good story, full of pictures, hospital bills, tearful pleas for protection. She was so good that I started questioning what I did to make her feel that way! If you heard her side of the story and then my side, you may still believe she was telling the truth because she put on such a good show. The only thing that saved me was the evidence, which overwhelmingly showed she was bat-$hit crazy and that I had never contacted her or visited her property. I even had a statement from a police officer and the Fire Chief that both said she was "mentally unstable and a danger to others."

While it's one thing for BP to allow these discussions between members, it's an entirely different matter to actively participate and advocate for one side or the other. I strongly advise consulting your attorney before engaging in such matters, as their expertise can provide you with a solid foundation of knowledge and guidance.

The DIY Landlord Book4.7248 Reviews

Podcast Guest on Show #223

Scott TrenchPro Member

OP

Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes

2y

Completely agree, @Nathan Gesner

I don’t know who is right or wrong here. Or where the shades of gray are.

But the pattern of intimidation of LPs by GPs is clear. It ends now.

I won’t judge the accused. But I will shine a light on the next threat that I hear about and name the person threatening. And I will make it a story if an LP is actually sued.

18 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

2y

I’d hate to see syndicators go the way gurus have gone…..

I’ve been a real estate fund manager and or syndicator for 25 years. The last 10 -15 years have seen the introduction of many products that have made it much much easier for marginally qualified and even unqualified people to enter the arena as real estate syndicators. Legal competition has cut the cost of a Reg D offering from $25,000 to $8,000. On line platforms make the marketing, administrative and organizational aspects of syndication about 1/10 as tedious as before. And the surge in investor interest in “passive” real estate investments has given even syndicators with thin resumes opportunity to score significant capital from passive investors. It may be only a matter of time before we see the Salt Lake City / Las Vegas Guru marketing companies entering the “guru” syndication field.

However; as @Scott Trench suggests, there MAY be in some isolated instances a different side. Just as fast as a good reputation is made on line, one can be ruined. Some people know this and can decide to take advantage by either reporting false accusations about syndicators or engaging in selected partial truths. I know from experience as I had this threatened against me. Look - investments can be risky. People can lose money. If someone has a bad experience and loses money then it’s their right to report it if they so desire. What’s not there right is to report untruths and misinformation.

The posters that state that when an investment goes south the syndicator no longer want to communicate are very believable for 2 reasons. First, the syndicator who’s not long term - just really into what’s “hot” at the moment, figures he’s no longer going to make any more money, so loses interest. Second, human nature is such that people don’t want to continuously discuss bad news - especially if they have nothing new to report.

To display what PROFESSIONAL syndicators do, I’ll tell you how we operate. We have two people who part of their job is to communicate with our investors. When ANY information or development, good or bad becomes known to us about a deal we are invested in, within 48 hours we send an email to each investor invested in that deal, as well as post it on our investors only portion of our platform. So, for example of a neutral development, if one of our syndicated loans as asked for a payoff amount we will access that chance of being paid off, and inform investors so that they will know that they will have X amount of capital going into there liquid funds.

Numerous experienced investors have stated that the syndicator is as important as the property. I believe the syndicator in most instances is more important. As a passive investor you have ZERO control over your money - and unlike shares of a REIT you can not easily liquidate - at least not at anywhere near market value.

Part of the “problem” is that unqualified syndicators tend to take money from anyone who meets minimal governmental requirements. IMO syndicators should make it abundantly clear - and I’d don’t mean by small type in the PPM - that an investor should only invest the amount he can afford to lose. Many investors assume that since they’re investing in real estate they can’t lose - this is a problem with investors who haven’t been through a real estate depression. Most real estate property syndicates utilize 50% or more leverage. Considering that only 90% of your investment actually goes into the real estate, this leaves at best 40% equity. Considering that it cost about 8% to sell a property, a decline in value of 32% will wipe out the investors equity. In 2008 the average property value fell 40% + .

Here are some rules for passive investors that I have come up with through the years

1- before investing in syndications determine if REITs can satisfy your investment objectives. The ONLY reason to invest in real estate syndications rather than REITS is better return.
2- if you decide syndications are better for you, spend due diligence on vetting the syndicator - eliminate any that do not have the experience, verifiable track record, or investment philosophy you want. Eliminate any with significant legal issues. Eliminate any that do not have a plan in place if they become incapacitated. Do not invest with a syndicator who doesn’t meet your criteria no matter how great the deal seems.
3- Limit your investment in any one deal to 10% of your investment capital. Limit your investment with any one syndicator to 20% of your investment capital. Only violate this rule after you’ve had SIGNIFICANT personal experience with the particular syndicator.
4- if you can’t afford to lose capital invest in Vanguard Money Market Fund instead of real estate

As for “calling out” syndicators who don’t want to engage with the investors whose money they accepted, and want to threaten legal action against those same investors, it would be GREAT to expose them and hopefully make it impossible for them to continue syndicating.

Private Mortgage Financing Partners, LLC

11 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

2y

Quote from @Scott Trench:

Completely agree, @Nathan Gesner

I don’t know who is right or wrong here. Or where the shades of gray are.

But the pattern of intimidation of LPs by GPs is clear. It ends now.

I won’t judge the accused. But I will shine a light on the next threat that I hear about and name the person threatening. And I will make it a story if an LP is actually sued.

Thank you for taking a stand

Private Mortgage Financing Partners, LLC

Brock Mogensen

Real Estate Syndicator · Milwaukee, WI · Member since 2018 · 1k+ posts · 907 votes

2y

Agreed. It's one thing if a deal is performing poorly, but to ghost your investors and then threaten them, not ideal.

2 Reply

Evan Polaski

Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes

2y

@Brian Burke, you bring up a good point, but also, unfortunately, this is all grey area.

A) there are those syndicators that have been at it for 5-10 years, made a killing in the COVID era run-up and maybe don't really care anymore. They made their millions, and while they don't want the gravy train cut off, they also are looking at their personal bank account and thinking: I can put my cash in treasuries and still make $1mm/yr, so 'F' it.

B) What is this "long time in business"? While I agree with you and the length of your track record, there are many groups out there that can say: we have been at this since 2017, and have a longer track record than the potential LP is likely to see from the many other groups that only got started in 2019, 2020, 2021... You sort of noted in your opening comment: a track record IN REAL ESTATE, should be measured in decades, not years.

@Don Konipol, unfortunately most of the syndicators ARE gurus... :)

4 Reply

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

2y

Quote from @Evan Polaski:

@Brian Burke, you bring up a good point, but also, unfortunately, this is all grey area.

A) there are those syndicators that have been at it for 5-10 years, made a killing in the COVID era run-up and maybe don't really care anymore. They made their millions, and while they don't want the gravy train cut off, they also are looking at their personal bank account and thinking: I can put my cash in treasuries and still make $1mm/yr, so 'F' it.

B) What is this "long time in business"? While I agree with you and the length of your track record, there are many groups out there that can say: we have been at this since 2017, and have a longer track record than the potential LP is likely to see from the many other groups that only got started in 2019, 2020, 2021... You sort of noted in your opening comment: a track record IN REAL ESTATE, should be measured in decades, not years.

@Don Konipol, unfortunately most of the syndicators ARE gurus... :)

Don’t agree. Most of the successful syndicators are NOT gurus - we are analytical types not sales types - and we make so much money as syndicators we wouldn’t want or need the hassle of the guru “lifestyle”. The best syndicators are INVESTORS - gurus are MARKETING/SALE PEOPLE.

Private Mortgage Financing Partners, LLC

5 Reply

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

2y

OP I’m going a different way on this and the original thread. Long read on both. Yes I have lost 100% of an investment that at the time was 20% of my wealth. A CEO of two merging banks decided that a -1 plus a -1 would equal a +2. I was expecting to make 40% profit in a month. But did not plan on a $Trillion dollar asset base decision to be made by an idiot.

Whose fault was it? It was my fault.

I’m going to make several posts back to back. Then make a suggestion to BP.

LPs. Have a great deal for you. We are in the Self Storage business for the last 10 years. Have acquired 2 locations and developed 6 locations. Have sold 4 of them at a tremendous profit. We are the greatest Self Storage Gurus in the entire Universe. The name Star Lord was taken so I call us Storage Lord we are that good. TRUST me. Not telling you. This is my first Syndication.

We have a $60mm project in one large city. Will be 20 $3mm cost locations. Looking for $20mm raise. $15mm will go as a downpayment. Not telling you. But $5mm will go to me day one for originating the deal. Again not telling you, but I will not put any of the base $15mm down, but will take a 20% equity Position.

This will be a 3 year hold investment. With an exit plan over year 4. You can make investments of increments of $50,000. Our funding from the bank will be at 3.5% interest. There is no early buyout available due to the short duration window. Expected returns are 200% cash on cash from your investment over the year 4 exit plan. Again not telling you my return is to Infinity and Beyond. I actually expect to make $10mm not counting the original $5mm.

This offering will be made in 2 tranches. $10mm by July 15th and another $10mm by August 15th. There will not be a 2nd phase. If you want in get in now.

Stop getting stuck by the corporate machine or the blood thirsty Stock market. This is your time for financial independence.

Quarterly updates to follow.

This is your time.

[email protected]443-812-0357

Gregory SchwartzBusiness Member

Rental Property Investor · College Station, TX · Member since 2016 · 1k+ posts · 1k+ votes

2y

Great post. Partnerships be it JV or syndication are a lot like getting married. The sad truth is that no matter how happy the marriage was, divorce is rarely a pleasant experience. The only winner is the "blood-sucking lawyer" -John Hammond

Schwartz Realty Group5117 Reviews

1 Reply

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

2y

LPs Quarterly update 1. Want to be upfront with you. Our model was based on a 3.5% interest rate. It is now 7.5%. Our debt was based in a 30 day revolving line of credit. It the FEDS fault. I didn't read the fine print but they can adjust the rate anytime they want. Want to be upfront with you. This is my first syndication. To make my 200% cash on cash to work I took the lowest interest rate available. I'm sorry you had to learn with me. I should have locked in finance over the 4 year investment life. Returns would have looked worse but the risk greatly diminished. Our revised projections are for you to achieve a 150% COC return now. Sorry for the inconvenience. Storage Lord.

Quarterly updates to follow.

Henry ClarkPro Member

Developer · Member since 2020 · 4k+ posts · 4k+ votes

2y

LPs quarterly update 2. The Hits Just Keep on Coming. Just got off the phone with the Storage building manufacturer. They can't take an order for 20 locations of that magnitude. Best they can do is 5 the remainder of this year. They are on a 6 month backlog. 10 next year and then 4 the following year. It the manufacturers fault, they should have expanded capacity. We still plan on a year 4 exit but since we will build later our exit occupancy level will be lower and thus our exit value will be lower. We have revised projections and you are still on par for a 100% COC over 4 years which is a great return.

Best wishes from Storage Lord.

By the way. Please stop calling about the interest rate increase in the last quarterly update. The reason I am Ghosting you is because I have already answered you.