Syndicator Threatens LPs for Negative Comment about them On BP

Account Closed

Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes

2y

Quote from @Scott Trench:

While I am in no position to verify the ~~truth or falsity~~ validity of claims made

1 Reply

Henry ClarkPro Member

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

2y

LPs Quarterly update 3.

My Mama Told Me,

the sun will come up tomorrow.

Now that we have the buildings ordered, I just got off the phone with the Erection Contractor. Although this is. 1mm population town. There are not enough trades people to build the number of units we need. To stay on our year 4 exit plan, the contractor will sub out some of the buildings but with out of town contractors. Our overall Construction costs have gone up 20%. It’s the contractors fault. They should have hired and trained more people.

The revised outlook is for a 50% COC over the 4 years. Generally a 12.5% return. Thats still better than TBills or CDs. And as far as Risk comparison. Hey, Storage Lord has got your back. Remember it's all about Passive investing.

Financial independence is a little further away than we thought. But keep learning that Jimmy Buffet song, “Living on Sponge Cake”.

Until the next quarterly update. Storage Lord.

5 Reply

Henry ClarkPro Member

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

2y

LP Quarterly Update 12: Year 3.

Storage Junior filling in for Storage Lord. Not telling you, but Storage Lord has been working his butt off for you and is taking some time off in the Bahamas looking for a beachfront property to spend some of the $5mm you gave him up front.

On the build out all 20 locations have been completed and operational. Great news.

On the Rent out we are at 30% occupancy. Our original 200% COC projections we used 90% occupancy to be conservative versus 100% for the bankers. Due to the lack of capacity by the building manufacturers and we couldn't get the buildings in year one, we switched to a 70% occupancy by year 3. We researched why we were at 30% versus our revised 30% and found out all of the existing competitors were only at 70% when we first started this project. We expect to be at 80% by year 7.

Wish we had known to check existing occupancy beforehand. But lesson learned. Our next Syndication will be more robust.

Storage Junior signing off.

Please stop calling. Storage Lord is out and I am the only one on the phones. As we get info we are passing along in our quarterly updates. And no, there is no exit strategy other than when we sale in year 4.

4 Reply

Henry ClarkPro Member

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

2y

LP Quarterly Update 13: Year 4

This is Storage Lord. You’re like family to me. With our occupancy at 35%, it is improving. We are not meeting operational costs plus P/I.

I know this is a hard message but to save your equity we need a 30% cash call. Plus we have some Preferred investors who will take a 30% position. These two actions should save 60% of your existing equity. With these steps our exit timing has moved out to year 6 when we are at 80% occupancy.

Know this isn’t the best of news. But by now getting ready for Financial Independence you have learned 4 or 5 Jimmy Buffett and Bob Marley songs.

To reduce costs we have let some of our team go. Quarterly updates are suspended until further news updates warrant.

2 Reply

Henry ClarkPro Member

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

2y

BP. OP

I made the following recommendation in another Syndication post.

1. How does BP monetize?
A. Stir the pot or have Posters stir the pot to get the site ratings.

B. Sell beneficial products or services like your Boot Camp once you have reached Critical Mass.

In the Syndication model the LP is the banker also. They have to do due diligence. Due diligence is not passive.

Syndications are also not Debt or Stock investments from both an SEC, market information or management standpoint.

Offer a Boot Camp for LPs:

1. Does the funding stream match the exit plan?

2. Track record on execution. Managing both time and cost control.

3. Occupancy analysis versus local market.

4. Rental rate comparison for similar quality.

5. Stress test financing, cost control, time line, rental rates and occupancy levels.

6. Market capacity

And yes there will be Black Swan events that blow the project up. Thus the advice as has already been given, spread your risk out.

As BP can you judge or spend the time validating every LP complaint, and if they followed the above?

I would recommend they stay off forums with their complaints. They don’t know the legal borderlines and you don’t want to put BP at risk nor do you want to invest the time validating them. Their lawyers or the SEC can do that. Most people in a forum or Facebook act as if there is an invisible wall and can say anything with no repercussions and they have validation of their opinion.

BP and their followers are better served doing VaLue Add activities.

Last thought.

Don’t trust me, anything in Self Storage can be validated.

0 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ 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.

OMG.... I just fell in love!

3 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

2y

@Scott Trench I volunteer the full resources of myself, team, network and lobby powers with associates in facilitating any/all of these actions you deem required to take.

I can not applaud enough this stance you and BP are taking! My full respect, appreciation and admiration!

8 Reply

Alan F.

Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes

2y

Quote from @James Hamling:

@Scott Trench I volunteer the full resources of myself, team, network and lobby powers with associates in facilitating any/all of these actions you deem required to take.

I can not applaud enough this stance you and BP are taking! My full respect, appreciation and admiration!

3 Reply

Michael CalveyPro Member

Head of Sales at BiggerPockets · Denver, CO · Member since 2023 · 124 posts · 154 votes

2y

This exact situation has been playing out on Twitter in recent weeks, with many 'business influencers' who jumped into the syndication space a few years ago facing backlash.

These syndicators promised seemingly guaranteed returns, much like a bond, downplaying the actual risks involved.

These GPs presented investment decks showing that a few small improvements would significantly increase property values, allowing them to refinance the deals, take the 'profits,' and return capital to the LPs.

In reality, as market conditions changed rapidly, these promises fell through. Many 'influencer' syndicators have not paid out distributions to their limited partners for over two years.

It's disheartening to see a lack of transparency and investigation into these funds.

LPs deserve clear communication and honesty from their GPs.

When things go wrong, the last thing they need is intimidation and legal threats.

[email protected]

4 Reply

Andrew SyriosPro Member

Moderator

Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes

2y

Name and shame (of course with the verification measures you mentioned). Bad real estate operators should fear BiggerPockets

Podcast Guest on Show #121

4 Reply

Ned J.Pro Member

Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes

2y

I get what you are trying to do and protect, but this is a very slippery slope to get into....

In the veterinary field we see this all the time....upset clients going on social media and trying to destroy vets and clinics..... and a lot of the time post complete bullsh$t and inaccurate accounts of the situation. They straight up lie about what really happen and all the readers jump on the bandwagon and they set out to destroy a vet and the business. Happens A LOT... Vets can get on and try to post their account of the situation and it often doesnt end well- the mob attacks even harder. If you post a bunch of lies and meritless accusations that are an attack on me and my business, damn right I'm going to threaten you with a lawsuit.

My point is.... be careful on who's "side" you try and defend... because there are ALWAYS 2 sides to the story and you wont get the full picture off some internet post. Its very easy to have posts get sucked into the mob mentality of attacking XYZ based on a biased accounting of the situation. I'm all for calling out con artists and scammers that steal people's money..... but investing is a risk and the accountability rarely falls all on one side of the fence.

3 Reply

James Hamling

Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes

2y

Quote from @Ned J.:

I get what you are trying to do and protect, but this is a very slippery slope to get into....

In the veterinary field we see this all the time....upset clients going on social media and trying to destroy vets and clinics..... and a lot of the time post complete bullsh$t and inaccurate accounts of the situation. They straight up lie about what really happen and all the readers jump on the bandwagon and they set out to destroy a vet and the business. Happens A LOT... Vets can get on and try to post their account of the situation and it often doesnt end well- the mob attacks even harder. If you post a bunch of lies and meritless accusations that are an attack on me and my business, damn right I'm going to threaten you with a lawsuit.

My point is.... be careful on who's "side" you try and defend... because there are ALWAYS 2 sides to the story and you wont get the full picture off some internet post. I'm all for calling out scam artists and criminal and holding people accountable to ripping people off.... but tread lightly and be sure you are sticking up for the right person. Make sure you have FACTS to back things up.... not accounts by biased individuals with an agenda

I do not agree with what you have to say, but I'll defend to the death your right to say it....

2 Reply

Joe S.Pro Member

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

2y

Quote from @Nathan Gesner:

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.

Some good points, Nathan. it definitely gave me a moment of second-guessing my original thoughts. This particular concept goes beyond this post or any recent post. Sometimes the liars are more convincing than those that are telling the truth.

1 Reply

Chris SeveneyBusiness Member

Moderator

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

2y

@Joe S.

I would say BP does a good job as well as its members

For example when peerstreet went under people were on BP blasting them because “they did not know” they invested in unsecured debt because they noted they invested in secured loans

But if you read the literature it was clear the investors were unsecured even though the company invested in secured loans (which this structure is not uncommon) - they were called out for this.

There are components related to communication that cannot be verified unless posted but most documents and property transfers (like the one I assume is referenced in the start of this post) cannot be disputed.

7e investments53 Reviews

Website View Page

1 Reply

Lucia Rushton

Realtor · Dallas - Fort Worth Metroplex, TX · Member since 2016 · 1k+ posts · 925 votes

2y

@Scott Trench words can not express how grateful I am for your management style, your passion for truth and honesty, and your commitment to this platform. THANK YOU 🙏

Totally off topic but I wish you would consider moving into politics. You would be a breath of fresh air. America needs your management style - take responsibility, fess up, come clean and do the right thing.

0 Reply

Nate Marshall

Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 735 votes

2y

It happens with a lot of "gurus" as well.

1 Reply

JD MartinBusiness Member

Moderator

Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

2y

Fear of lawsuits is totally overblown in my opinion. As a local government executive I was sued twice (in my capacity as city manager), have been sued once by an insurance company (abrogation effort) and once by a private individual (stepdaughter in car accident in my vehicle). Total out of pocket costs to me in 4 lawsuits: $800. Not sure if I can count the number of times I was threatened to be sued. Maintain good insurance, act ethically and honestly as best as possible, and keep good records and you virtually have nothing to worry about.

I don't think BP is out on a limb here. The syndicator is provided the opportunity to give his or her side of the story, and as long as we are simply conveying information as we know it there's nothing to be had there. Besides, you have to prove financial loss in order to have any basis to collect, and that would probably require that a bunch of current investors acted detrimental to the fund and testified that it was because of BP that they did so.

Podcast Guest on Show #243

Skyline Properties

View Page

7 Reply

Amir Batouli

Member since 2023 · 6 posts · 7 votes

2y

I see the original thread on the syndicator who went dark and the LP had to find out on BP that the property was foreclosed on has been removed. Maybe the GP (who is very active posting on BP as an "expert" looking for suckers) has good enough lawyers to threaten BP into deleting the original thread?

These GPs have a great interest in keeping their potential LPs (marks) ignorant so they will be protecting those interest mob style (dealing with rats). Especially as they keep raising funds from new suckers like that particular GP who is now raising funds for another multifamily value add deal as we speak.

2 Reply

Ariel K.

TX · Member since 2018 · 154 posts · 92 votes

2y

@Ned J. Def understand what you are saying, but with free speech, you have to take the bad with the good. If someone does say something false, I would hope you can either respond or hopefully others give their experience. It’s sad that people will lie, but you can’t police everything.

0 Reply

Nate Marshall

Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 735 votes

2y

Quote from @Amir Batouli:

I see the original thread on the syndicator who went dark and the LP had to find out on BP that the property was foreclosed on has been removed. Maybe the GP (who is very active posting on BP as an "expert" looking for suckers) has good enough lawyers to threaten BP into deleting the original thread?

These GPs have a great interest in keeping their potential LPs (marks) ignorant so they will be protecting those interest mob style (dealing with rats). Especially as they keep raising funds from new suckers like that particular GP who is now raising funds for another multifamily value add deal as we speak.

Absolute fact! Keeping LP's in the dark is an art and science. Some have perfected it.

0 Reply

Clay S

Real Estate Investor · Colorado Springs, CO · Member since 2012 · 6 posts · 4 votes

2y

Quote from @Nate Marshall:

Quote from @Amir Batouli:

I see the original thread on the syndicator who went dark and the LP had to find out on BP that the property was foreclosed on has been removed. Maybe the GP (who is very active posting on BP as an "expert" looking for suckers) has good enough lawyers to threaten BP into deleting the original thread?

These GPs have a great interest in keeping their potential LPs (marks) ignorant so they will be protecting those interest mob style (dealing with rats). Especially as they keep raising funds from new suckers like that particular GP who is now raising funds for another multifamily value add deal as we speak.

Absolute fact! Keeping LP's in the dark is an art and science. Some have perfected it.

@Scott Trench what happened to the original thread?

3 Reply

Andrew SyriosPro Member

Moderator

Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes

2y

Quote from @Michael Calvey:

This exact situation has been playing out on Twitter in recent weeks, with many 'business influencers' who jumped into the syndication space a few years ago facing backlash.

These syndicators promised seemingly guaranteed returns, much like a bond, downplaying the actual risks involved.

These GPs presented investment decks showing that a few small improvements would significantly increase property values, allowing them to refinance the deals, take the 'profits,' and return capital to the LPs.

In reality, as market conditions changed rapidly, these promises fell through. Many 'influencer' syndicators have not paid out distributions to their limited partners for over two years.

It's disheartening to see a lack of transparency and investigation into these funds.

LPs deserve clear communication and honesty from their GPs.

When things go wrong, the last thing they need is intimidation and legal threats.

This sounds like many of the online scams that get highlighted on Coffeezilla's YouTube channel, perhaps we should ask him to get on the case.

Podcast Guest on Show #121

0 Reply

Quentin McNewPro Member

Real Estate Investor · Champaign, IL · Member since 2017 · 63 posts · 37 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.

Now that is expectations and the way standard operating procedures should be for handling these situations! Well done! I've had to say "I don't have good news, but I've got honest news" on deals I've syndicated before, but I sleep better at night in full transparency. Honesty and transparency is always the best policy. @Scott Trench

[email protected]

0 Reply

Christopher G.

Rental Property Investor · Hohenfels, Germany · Member since 2018 · 70 posts · 42 votes

2y

Quote from @Mark F.:

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

This is like financial PTSD. I 'learned' about syndications and had a few discussions with him back in 2019 and did 4 deals before I told myself that I needed to diversify and invest elsewhere. 3 of those 4 deals have failed, with 100% LP capital lost and the 4th one, though the latest correspondence was positive, is now in a capital call event because of the loan.

This GP's ability to move fast and replace bad apartment managers, read where the market is going, and engage (call every LP and explain the situation during a capital call) has led to millions of investor capital being lost. I was a novice investor in 2019-21 and thought the deals all made sense but didn't understanding where cap rates were and where the market was, I feel like the GP team should have known like many other GPs knew what was coming. I'm sure the GPs also lost millions but they also make a lot due to acquisition fees. It's extremely frustrating but perhaps/hopefully it has made me a better investor?

1 Reply

Jeremy VanDelinder

Real Estate Coach · Round Rock, TX · Member since 2015 · 431 posts · 235 votes

2y

Good for you @Scott Trench

0 Reply

Syndicator Threatens LPs for Negative Comment about them On BP

Syndicator Threatens LPs for Negative Comment about them On BP

Most Popular Reply

94 Replies