Syndicator Threatens LPs for Negative Comment about them On BP

Syndications & Passive Real Estate Investing
2yFollow

Syndicator Threatens LPs for Negative Comment about them On BP

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

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.

Podcast Guest on Show #223
BiggerPockets
119Reply
392 views

Most Popular Reply

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.

Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
21Reply
See this reply in the discussion

94 Replies

Jump to latestLatest
  • Nate Marshall
    Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 729 votes
    2y
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 

    0Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    2y
    Quote from @Nate Marshall:
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 


    Let's flip this to a more positive note; 

    What are the hallmarks of a GOOD GP/Syndicator? Other than the obvious "makes me $$$$". 

    Because I too am hearing of Syndicators/Syndicated deals imploding all over the place and LP's singing similar tune of getting f'd where I wonder how, just how this could be at scale. Because exactly 0 of my deals have imploded over last years...... And yes, plenty of these are at scale. My opinion is the sheer volume of R.E. know-nothings who jumped into space over recent years, the people blindly throwing $$$$ at every good slogan and sales pitch without real D.D. done on the operator themself to confirm they had the chops to do what selling there gonna do. 

    So, what is a "Good" GP/Syndicator look like today? 

    1Reply
  • Scott TrenchPro Member
    OP
    Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
    2y
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 


    Let's flip this to a more positive note; 

    What are the hallmarks of a GOOD GP/Syndicator? Other than the obvious "makes me $$$$". 

    Because I too am hearing of Syndicators/Syndicated deals imploding all over the place and LP's singing similar tune of getting f'd where I wonder how, just how this could be at scale. Because exactly 0 of my deals have imploded over last years...... And yes, plenty of these are at scale. My opinion is the sheer volume of R.E. know-nothings who jumped into space over recent years, the people blindly throwing $$$$ at every good slogan and sales pitch without real D.D. done on the operator themself to confirm they had the chops to do what selling there gonna do. 

    So, what is a "Good" GP/Syndicator look like today? 

    For me, a "Good" Sponsor looks something like this: 

    - Fees more or less result in a solid full-time salary for sponsor, not millions in upfront compensation:      Fees are structured such that the sponsor earns a good living while managing your money, but does not make a killing until your money is returned. For example, I'd like to see a sponsor making $150,000 - $300,000 in base salary income from their combined portfolio of projects, if they are managing my money full-time. Any more than this, and I feel that I am paying for their luxury lifestyle before getting returns delivered. Any less than this, and I worry they will "Side-Hustle" because the income isn't enough to appease the ambitions of the aggressive, high ego personalities that are drawn to GP work and Syndications.

    Obviously this range can vary, but "bad" to me is a sponsor bringing home $2.5M - $10M+ per year just in acquisition fees. 

    I want my GPs to buy their mountain home, fleet of luxury vehicles, and fly first class or private, of course! ... Just AFTER they've made me money... not WITH the money I JUST gave them. 

    - Full-Time Focus:     Related, Sponsor works on the deal or a small, closely related subset of deals full time. Sponsor does not have 30 disparate projects competing for their attention. I am paying them for full-time focus on my deal, and the very best they have to offer. Sponsor is relatively "hands-on" with a concentrated pool of investments.

    - Concentrated investment thesis and focus:     I am paying a sponsor high fees relative to a REIT for concentrated expertise in a narrow niche. For example, I like to see sponsors who JUST do one thing, and do it well. Perhaps that's Multifimly in Houston, Texas. Or Self-Storage in Atlanta, GA.

    I am personally not interested in paying a sponsor high fees to diversify across the entire continental United States in random opportunities across multiple asset types. I will do that diversification myself by giving my money to those who I perceive to be experts in specific asset classes, and do not a single sponsor to do that. 

    - Sponsor is transparent and realistic. Sponsor is self-aware and humble. Sponsor does not pretend to be the second coming of Warren Buffet:     Sponsor does not tout a "Track Record on Full Cycle Deals" that is marred by no recent exits and obviously struggling current portfolio in public advertising. Sponsor is realistic about current market conditions, and is humbling themselves on current portfolio, while also realistically appraising current environment as a potentially better buying opportunity than the peak 3 years ago. 

    - Sponsor learns from mistakes    . Sponsor takes personally accountability. When and if sponsor's company is discussed hundreds of times on an online forum, and they are obviously out there raising capital and publicly promoting their business, they are not pretending not to notice hundreds of negative discussions on BiggerPockets and failing to engage entirely. They are actively participating and easy to reach. 

    Notice that I'm not saying "Sponsor who makes me money" or "Sponsor with great track record". Track record, unless it goes back 30 years, is pretty meaningless to me in today's climate. *Almost anyone with a pulse could put up good returns in the 2010s. Half of sponsors are now getting crushed when the going is getting tough, and those previous track records don't really mean much, compared to the things I list above. 


    Podcast Guest on Show #223
    BiggerPockets
    7Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    2y
    Quote from @Scott Trench:
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 


    Let's flip this to a more positive note; 

    What are the hallmarks of a GOOD GP/Syndicator? Other than the obvious "makes me $$$$". 

    Because I too am hearing of Syndicators/Syndicated deals imploding all over the place and LP's singing similar tune of getting f'd where I wonder how, just how this could be at scale. Because exactly 0 of my deals have imploded over last years...... And yes, plenty of these are at scale. My opinion is the sheer volume of R.E. know-nothings who jumped into space over recent years, the people blindly throwing $$$$ at every good slogan and sales pitch without real D.D. done on the operator themself to confirm they had the chops to do what selling there gonna do. 

    So, what is a "Good" GP/Syndicator look like today? 

    For me, a "Good" Sponsor looks something like this: 

    - Fees more or less result in a solid full-time salary for sponsor, not millions in upfront compensation:      Fees are structured such that the sponsor earns a good living while managing your money, but does not make a killing until your money is returned. For example, I'd like to see a sponsor making $150,000 - $300,000 in base salary income from their combined portfolio of projects, if they are managing my money full-time. Any more than this, and I feel that I am paying for their luxury lifestyle before getting returns delivered. Any less than this, and I worry they will "Side-Hustle" because the income isn't enough to appease the ambitions of the aggressive, high ego personalities that are drawn to GP work and Syndications.

    Obviously this range can vary, but "bad" to me is a sponsor bringing home $2.5M - $10M+ per year just in acquisition fees. 

    I want my GPs to buy their mountain home, fleet of luxury vehicles, and fly first class or private, of course! ... Just AFTER they've made me money... not WITH the money I JUST gave them. 

    - Full-Time Focus:     Related, Sponsor works on the deal or a small, closely related subset of deals full time. Sponsor does not have 30 disparate projects competing for their attention. I am paying them for full-time focus on my deal, and the very best they have to offer. Sponsor is relatively "hands-on" with a concentrated pool of investments.

    - Concentrated investment thesis and focus:     I am paying a sponsor high fees relative to a REIT for concentrated expertise in a narrow niche. For example, I like to see sponsors who JUST do one thing, and do it well. Perhaps that's Multifimly in Houston, Texas. Or Self-Storage in Atlanta, GA.

    I am personally not interested in paying a sponsor high fees to diversify across the entire continental United States in random opportunities across multiple asset types. I will do that diversification myself by giving my money to those who I perceive to be experts in specific asset classes, and do not a single sponsor to do that. 

    - Sponsor is transparent and realistic. Sponsor is self-aware and humble. Sponsor does not pretend to be the second coming of Warren Buffet:     Sponsor does not tout a "Track Record on Full Cycle Deals" that is marred by no recent exits and obviously struggling current portfolio in public advertising. Sponsor is realistic about current market conditions, and is humbling themselves on current portfolio, while also realistically appraising current environment as a potentially better buying opportunity than the peak 3 years ago. 

    - Sponsor learns from mistakes    . Sponsor takes personally accountability. When and if sponsor's company is discussed hundreds of times on an online forum, and they are obviously out there raising capital and publicly promoting their business, they are not pretending not to notice hundreds of negative discussions on BiggerPockets and failing to engage entirely. They are actively participating and easy to reach. 

    Notice that I'm not saying "Sponsor who makes me money" or "Sponsor with great track record". Track record, unless it goes back 30 years, is pretty meaningless to me in today's climate. *Almost anyone with a pulse could put up good returns in the 2010s. Half of sponsors are now getting crushed when the going is getting tough, and those previous track records don't really mean much, compared to the things I list above. 



    Wow! Wow-wow-wow Scott.... Seriously, this is absolute solid gold! I could not have wished for a better reply, thanks. 

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y
    Quote from @Scott Trench:
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 


    Let's flip this to a more positive note; 

    What are the hallmarks of a GOOD GP/Syndicator? Other than the obvious "makes me $$$$". 

    Because I too am hearing of Syndicators/Syndicated deals imploding all over the place and LP's singing similar tune of getting f'd where I wonder how, just how this could be at scale. Because exactly 0 of my deals have imploded over last years...... And yes, plenty of these are at scale. My opinion is the sheer volume of R.E. know-nothings who jumped into space over recent years, the people blindly throwing $$$$ at every good slogan and sales pitch without real D.D. done on the operator themself to confirm they had the chops to do what selling there gonna do. 

    So, what is a "Good" GP/Syndicator look like today? 

    For me, a "Good" Sponsor looks something like this: 

    - Fees more or less result in a solid full-time salary for sponsor, not millions in upfront compensation:      Fees are structured such that the sponsor earns a good living while managing your money, but does not make a killing until your money is returned. For example, I'd like to see a sponsor making $150,000 - $300,000 in base salary income from their combined portfolio of projects, if they are managing my money full-time. Any more than this, and I feel that I am paying for their luxury lifestyle before getting returns delivered. Any less than this, and I worry they will "Side-Hustle" because the income isn't enough to appease the ambitions of the aggressive, high ego personalities that are drawn to GP work and Syndications.

    Obviously this range can vary, but "bad" to me is a sponsor bringing home $2.5M - $10M+ per year just in acquisition fees. 

    I want my GPs to buy their mountain home, fleet of luxury vehicles, and fly first class or private, of course! ... Just AFTER they've made me money... not WITH the money I JUST gave them. 

    - Full-Time Focus:     Related, Sponsor works on the deal or a small, closely related subset of deals full time. Sponsor does not have 30 disparate projects competing for their attention. I am paying them for full-time focus on my deal, and the very best they have to offer. Sponsor is relatively "hands-on" with a concentrated pool of investments.

    - Concentrated investment thesis and focus:     I am paying a sponsor high fees relative to a REIT for concentrated expertise in a narrow niche. For example, I like to see sponsors who JUST do one thing, and do it well. Perhaps that's Multifimly in Houston, Texas. Or Self-Storage in Atlanta, GA.

    I am personally not interested in paying a sponsor high fees to diversify across the entire continental United States in random opportunities across multiple asset types. I will do that diversification myself by giving my money to those who I perceive to be experts in specific asset classes, and do not a single sponsor to do that. 

    - Sponsor is transparent and realistic. Sponsor is self-aware and humble. Sponsor does not pretend to be the second coming of Warren Buffet:     Sponsor does not tout a "Track Record on Full Cycle Deals" that is marred by no recent exits and obviously struggling current portfolio in public advertising. Sponsor is realistic about current market conditions, and is humbling themselves on current portfolio, while also realistically appraising current environment as a potentially better buying opportunity than the peak 3 years ago. 

    - Sponsor learns from mistakes    . Sponsor takes personally accountability. When and if sponsor's company is discussed hundreds of times on an online forum, and they are obviously out there raising capital and publicly promoting their business, they are not pretending not to notice hundreds of negative discussions on BiggerPockets and failing to engage entirely. They are actively participating and easy to reach. 

    Notice that I'm not saying "Sponsor who makes me money" or "Sponsor with great track record". Track record, unless it goes back 30 years, is pretty meaningless to me in today's climate. *Almost anyone with a pulse could put up good returns in the 2010s. Half of sponsors are now getting crushed when the going is getting tough, and those previous track records don't really mean much, compared to the things I list above. 



     When you look at the majority of those being BLASTED right now here on BP lets look at them and Scott brings up great points:

    The two biggest ones are: 

    Full-Time Focus & Concentrated investment thesis and focus:

    Lets break them down:

    Full Time Focus: Is the sponsor working toward resolving the issues with the fund or are they out there raising money for their next fund and traveling the "GURU" circuit. 

    The ones getting blasted (ODC, RADD, Kawaoka, Ashcroft, Norada): What do they all have in common? Most of the sponsors are salesman out there promoting their membership / GURU courses. Are they actually working on the deal trying to make it better? Does it have their full time attention?

    Now lets look at concentration:

    Similar, ODC appears to be doing MF, debt, MHP etc.

    Kawaoka appears to be in anything and everything.

    Rad appears to be land, rentals and a $50k membership group to teach you how to buy real estate (which is ironic based on their current situation)...

    Ashcroft appears stays in their lane.

    Norada has little real estate but ecommerce, membership groups, broadway plays, bitcoin etc. but is starting a STR rental fund...

    These Jack of All Trades, Master of None.... 

    7e investments53 Reviews
    WebsiteView Page
    3Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Chris Seveney:
    Quote from @Scott Trench:
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 


    Let's flip this to a more positive note; 

    What are the hallmarks of a GOOD GP/Syndicator? Other than the obvious "makes me $$$$". 

    Because I too am hearing of Syndicators/Syndicated deals imploding all over the place and LP's singing similar tune of getting f'd where I wonder how, just how this could be at scale. Because exactly 0 of my deals have imploded over last years...... And yes, plenty of these are at scale. My opinion is the sheer volume of R.E. know-nothings who jumped into space over recent years, the people blindly throwing $$$$ at every good slogan and sales pitch without real D.D. done on the operator themself to confirm they had the chops to do what selling there gonna do. 

    So, what is a "Good" GP/Syndicator look like today? 

    For me, a "Good" Sponsor looks something like this: 

    - Fees more or less result in a solid full-time salary for sponsor, not millions in upfront compensation:      Fees are structured such that the sponsor earns a good living while managing your money, but does not make a killing until your money is returned. For example, I'd like to see a sponsor making $150,000 - $300,000 in base salary income from their combined portfolio of projects, if they are managing my money full-time. Any more than this, and I feel that I am paying for their luxury lifestyle before getting returns delivered. Any less than this, and I worry they will "Side-Hustle" because the income isn't enough to appease the ambitions of the aggressive, high ego personalities that are drawn to GP work and Syndications.

    Obviously this range can vary, but "bad" to me is a sponsor bringing home $2.5M - $10M+ per year just in acquisition fees. 

    I want my GPs to buy their mountain home, fleet of luxury vehicles, and fly first class or private, of course! ... Just AFTER they've made me money... not WITH the money I JUST gave them. 

    - Full-Time Focus:     Related, Sponsor works on the deal or a small, closely related subset of deals full time. Sponsor does not have 30 disparate projects competing for their attention. I am paying them for full-time focus on my deal, and the very best they have to offer. Sponsor is relatively "hands-on" with a concentrated pool of investments.

    - Concentrated investment thesis and focus:     I am paying a sponsor high fees relative to a REIT for concentrated expertise in a narrow niche. For example, I like to see sponsors who JUST do one thing, and do it well. Perhaps that's Multifimly in Houston, Texas. Or Self-Storage in Atlanta, GA.

    I am personally not interested in paying a sponsor high fees to diversify across the entire continental United States in random opportunities across multiple asset types. I will do that diversification myself by giving my money to those who I perceive to be experts in specific asset classes, and do not a single sponsor to do that. 

    - Sponsor is transparent and realistic. Sponsor is self-aware and humble. Sponsor does not pretend to be the second coming of Warren Buffet:     Sponsor does not tout a "Track Record on Full Cycle Deals" that is marred by no recent exits and obviously struggling current portfolio in public advertising. Sponsor is realistic about current market conditions, and is humbling themselves on current portfolio, while also realistically appraising current environment as a potentially better buying opportunity than the peak 3 years ago. 

    - Sponsor learns from mistakes    . Sponsor takes personally accountability. When and if sponsor's company is discussed hundreds of times on an online forum, and they are obviously out there raising capital and publicly promoting their business, they are not pretending not to notice hundreds of negative discussions on BiggerPockets and failing to engage entirely. They are actively participating and easy to reach. 

    Notice that I'm not saying "Sponsor who makes me money" or "Sponsor with great track record". Track record, unless it goes back 30 years, is pretty meaningless to me in today's climate. *Almost anyone with a pulse could put up good returns in the 2010s. Half of sponsors are now getting crushed when the going is getting tough, and those previous track records don't really mean much, compared to the things I list above. 



     When you look at the majority of those being BLASTED right now here on BP lets look at them and Scott brings up great points:

    The two biggest ones are: 

    Full-Time Focus & Concentrated investment thesis and focus:

    Lets break them down:

    Full Time Focus: Is the sponsor working toward resolving the issues with the fund or are they out there raising money for their next fund and traveling the "GURU" circuit. 

    The ones getting blasted (ODC, RADD, Kawaoka, Ashcroft, Norada): What do they all have in common? Most of the sponsors are salesman out there promoting their membership / GURU courses. Are they actually working on the deal trying to make it better? Does it have their full time attention?

    Now lets look at concentration:

    Similar, ODC appears to be doing MF, debt, MHP etc.

    Kawaoka appears to be in anything and everything.

    Rad appears to be land, rentals and a $50k membership group to teach you how to buy real estate (which is ironic based on their current situation)...

    Ashcroft appears stays in their lane.

    Norada has little real estate but ecommerce, membership groups, broadway plays, bitcoin etc. but is starting a STR rental fund...

    These Jack of All Trades, Master of None.... 


    Chris,, while not defending any of these sponsors. And too play a little devils advocate.. If these sponsors are not doing SOMETHING to generate income how are are they suppose to right the ship on their failed projects. ???  There has to be some recurring revenue to run the railroad or they just do a BK and walk away..  Its certainly a very precarious situation for these companies managing there reputations..Which in todays world of SM can be wiped out in a blink of the eye or a stroke of the keyboard..
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    2y

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently

    7e investments53 Reviews
    WebsiteView Page
    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Chris Seveney:

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently


    Chris,  as one who lived and just about got completely wiped out in the 08 to 2011 meltdown I had a front row seat to many of my peers and competitors and your exactly right. I saw many do every thing they could to keep their lifestyle intact. In the long run did not work out for really any of them and BK soon followed.. I suspect many of these investor where not in deals in those years and never really saw or experienced the utter wipe outs that were happening to billion dollar companies. Of course situation was a little different capital FROZE this time Capita did not freeze the rates just sky rocketed.
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    2Reply
  • Nate Marshall
    Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 729 votes
    2y
    Quote from @Chris Seveney:
    Quote from @Scott Trench:
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @Christopher G.:
    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?


     There are only a handful of GP's and sponsors I would suggest anyone invest with. 


    Let's flip this to a more positive note; 

    What are the hallmarks of a GOOD GP/Syndicator? Other than the obvious "makes me $$$$". 

    Because I too am hearing of Syndicators/Syndicated deals imploding all over the place and LP's singing similar tune of getting f'd where I wonder how, just how this could be at scale. Because exactly 0 of my deals have imploded over last years...... And yes, plenty of these are at scale. My opinion is the sheer volume of R.E. know-nothings who jumped into space over recent years, the people blindly throwing $$$$ at every good slogan and sales pitch without real D.D. done on the operator themself to confirm they had the chops to do what selling there gonna do. 

    So, what is a "Good" GP/Syndicator look like today? 

    For me, a "Good" Sponsor looks something like this: 

    - Fees more or less result in a solid full-time salary for sponsor, not millions in upfront compensation:      Fees are structured such that the sponsor earns a good living while managing your money, but does not make a killing until your money is returned. For example, I'd like to see a sponsor making $150,000 - $300,000 in base salary income from their combined portfolio of projects, if they are managing my money full-time. Any more than this, and I feel that I am paying for their luxury lifestyle before getting returns delivered. Any less than this, and I worry they will "Side-Hustle" because the income isn't enough to appease the ambitions of the aggressive, high ego personalities that are drawn to GP work and Syndications.

    Obviously this range can vary, but "bad" to me is a sponsor bringing home $2.5M - $10M+ per year just in acquisition fees. 

    I want my GPs to buy their mountain home, fleet of luxury vehicles, and fly first class or private, of course! ... Just AFTER they've made me money... not WITH the money I JUST gave them. 

    - Full-Time Focus:     Related, Sponsor works on the deal or a small, closely related subset of deals full time. Sponsor does not have 30 disparate projects competing for their attention. I am paying them for full-time focus on my deal, and the very best they have to offer. Sponsor is relatively "hands-on" with a concentrated pool of investments.

    - Concentrated investment thesis and focus:     I am paying a sponsor high fees relative to a REIT for concentrated expertise in a narrow niche. For example, I like to see sponsors who JUST do one thing, and do it well. Perhaps that's Multifimly in Houston, Texas. Or Self-Storage in Atlanta, GA.

    I am personally not interested in paying a sponsor high fees to diversify across the entire continental United States in random opportunities across multiple asset types. I will do that diversification myself by giving my money to those who I perceive to be experts in specific asset classes, and do not a single sponsor to do that. 

    - Sponsor is transparent and realistic. Sponsor is self-aware and humble. Sponsor does not pretend to be the second coming of Warren Buffet:     Sponsor does not tout a "Track Record on Full Cycle Deals" that is marred by no recent exits and obviously struggling current portfolio in public advertising. Sponsor is realistic about current market conditions, and is humbling themselves on current portfolio, while also realistically appraising current environment as a potentially better buying opportunity than the peak 3 years ago. 

    - Sponsor learns from mistakes    . Sponsor takes personally accountability. When and if sponsor's company is discussed hundreds of times on an online forum, and they are obviously out there raising capital and publicly promoting their business, they are not pretending not to notice hundreds of negative discussions on BiggerPockets and failing to engage entirely. They are actively participating and easy to reach. 

    Notice that I'm not saying "Sponsor who makes me money" or "Sponsor with great track record". Track record, unless it goes back 30 years, is pretty meaningless to me in today's climate. *Almost anyone with a pulse could put up good returns in the 2010s. Half of sponsors are now getting crushed when the going is getting tough, and those previous track records don't really mean much, compared to the things I list above. 



     When you look at the majority of those being BLASTED right now here on BP lets look at them and Scott brings up great points:

    The two biggest ones are: 

    Full-Time Focus & Concentrated investment thesis and focus:

    Lets break them down:

    Full Time Focus: Is the sponsor working toward resolving the issues with the fund or are they out there raising money for their next fund and traveling the "GURU" circuit. 

    The ones getting blasted (ODC, RADD, Kawaoka, Ashcroft, Norada): What do they all have in common? Most of the sponsors are salesman out there promoting their membership / GURU courses. Are they actually working on the deal trying to make it better? Does it have their full time attention?

    Now lets look at concentration:

    Similar, ODC appears to be doing MF, debt, MHP etc.

    Kawaoka appears to be in anything and everything.

    Rad appears to be land, rentals and a $50k membership group to teach you how to buy real estate (which is ironic based on their current situation)...

    Ashcroft appears stays in their lane.

    Norada has little real estate but ecommerce, membership groups, broadway plays, bitcoin etc. but is starting a STR rental fund...

    These Jack of All Trades, Master of None.... 


     Anything in crypto or wellness? LOL 

    1Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    2y
    Quote from @Chris Seveney:

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently


     This is exactly what I suspect as well. I could maybe sign up with that theory if the GPs were using the side hustle money as a way of cutting or eliminating their fees & salaries altogether while they try to hang in long enough to hope for enough rate cuts to refinance or the market to unfreeze and let them unload at least at break-even, but I bet none of them do anything of the kind. 

    The character of a wo/man shows when the ship is taking on water. Do they save women & children first, or do they abandon ship and watch it go down from afar? Personally, I think most of these funds are run by greedy, opportunistic individuals who capitalized on their own fame, a temporary dummy-proof market, and intoxication with their own "abilities" to vacuum up a bunch of largely unsuspecting dupes, accredited or not into funds that were always risky in that they needed everything to go exactly right (largely, the same way they had been going for the previous 10+ year, a historical anomaly) in order to make it work. I suspect most of these funds will be unwound not with bankruptcy but with severe haircuts for the LPs and break even or slight profit for the top dogs, and let's go heavy into RE courses and teach you how to get out of your paralysis type plays. 

    Podcast Guest on Show #243
    Skyline Properties
    View Page
    3Reply
  • Nate Marshall
    Real Estate Consultant · Evergreen, CO · Member since 2018 · 1k+ posts · 729 votes
    2y
    Quote from @JD Martin:
    Quote from @Chris Seveney:

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently


     This is exactly what I suspect as well. I could maybe sign up with that theory if the GPs were using the side hustle money as a way of cutting or eliminating their fees & salaries altogether while they try to hang in long enough to hope for enough rate cuts to refinance or the market to unfreeze and let them unload at least at break-even, but I bet none of them do anything of the kind. 

    The character of a wo/man shows when the ship is taking on water. Do they save women & children first, or do they abandon ship and watch it go down from afar? Personally, I think most of these funds are run by greedy, opportunistic individuals who capitalized on their own fame, a temporary dummy-proof market, and intoxication with their own "abilities" to vacuum up a bunch of largely unsuspecting dupes, accredited or not into funds that were always risky in that they needed everything to go exactly right (largely, the same way they had been going for the previous 10+ year, a historical anomaly) in order to make it work. I suspect most of these funds will be unwound not with bankruptcy but with severe haircuts for the LPs and break even or slight profit for the top dogs, and let's go heavy into RE courses and teach you how to get out of your paralysis type plays. 


     You hit all of the marks on this. Well done. 

    0Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    2y
    Quote from @Nate Marshall:
    Quote from @JD Martin:
    Quote from @Chris Seveney:

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently


     This is exactly what I suspect as well. I could maybe sign up with that theory if the GPs were using the side hustle money as a way of cutting or eliminating their fees & salaries altogether while they try to hang in long enough to hope for enough rate cuts to refinance or the market to unfreeze and let them unload at least at break-even, but I bet none of them do anything of the kind. 

    The character of a wo/man shows when the ship is taking on water. Do they save women & children first, or do they abandon ship and watch it go down from afar? Personally, I think most of these funds are run by greedy, opportunistic individuals who capitalized on their own fame, a temporary dummy-proof market, and intoxication with their own "abilities" to vacuum up a bunch of largely unsuspecting dupes, accredited or not into funds that were always risky in that they needed everything to go exactly right (largely, the same way they had been going for the previous 10+ year, a historical anomaly) in order to make it work. I suspect most of these funds will be unwound not with bankruptcy but with severe haircuts for the LPs and break even or slight profit for the top dogs, and let's go heavy into RE courses and teach you how to get out of your paralysis type plays. 


     You hit all of the marks on this. Well done. 


    0Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @JD Martin:
    Quote from @Chris Seveney:

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently


     This is exactly what I suspect as well. I could maybe sign up with that theory if the GPs were using the side hustle money as a way of cutting or eliminating their fees & salaries altogether while they try to hang in long enough to hope for enough rate cuts to refinance or the market to unfreeze and let them unload at least at break-even, but I bet none of them do anything of the kind. 

    The character of a wo/man shows when the ship is taking on water. Do they save women & children first, or do they abandon ship and watch it go down from afar? Personally, I think most of these funds are run by greedy, opportunistic individuals who capitalized on their own fame, a temporary dummy-proof market, and intoxication with their own "abilities" to vacuum up a bunch of largely unsuspecting dupes, accredited or not into funds that were always risky in that they needed everything to go exactly right (largely, the same way they had been going for the previous 10+ year, a historical anomaly) in order to make it work. I suspect most of these funds will be unwound not with bankruptcy but with severe haircuts for the LPs and break even or slight profit for the top dogs, and let's go heavy into RE courses and teach you how to get out of your paralysis type plays. 


     You hit all of the marks on this. Well done. 


    Yikes. The downsides of signing a PG....

    Document List (state.ny.us)


    7e investments53 Reviews
    WebsiteView Page
    1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    1y
    Quote from @Chris Seveney:
    Quote from @James Hamling:
    Quote from @Nate Marshall:
    Quote from @JD Martin:
    Quote from @Chris Seveney:

    @Jay Hinrichs

    I 100% agree - but I would bet you a nickel that what many sponsors are doing right now has 0 benefit to the funds that are in trouble or right the ship - they are just trying to stay afloat and raise money so they can live their “lifestyle” for the next few years.

    To the contrary I think many know it’s a lost cause but do not want to admit it / make it public as it will crush their money raising efforts on their new funds.

    Maybe I am wrong but my gut tells me differently


     This is exactly what I suspect as well. I could maybe sign up with that theory if the GPs were using the side hustle money as a way of cutting or eliminating their fees & salaries altogether while they try to hang in long enough to hope for enough rate cuts to refinance or the market to unfreeze and let them unload at least at break-even, but I bet none of them do anything of the kind. 

    The character of a wo/man shows when the ship is taking on water. Do they save women & children first, or do they abandon ship and watch it go down from afar? Personally, I think most of these funds are run by greedy, opportunistic individuals who capitalized on their own fame, a temporary dummy-proof market, and intoxication with their own "abilities" to vacuum up a bunch of largely unsuspecting dupes, accredited or not into funds that were always risky in that they needed everything to go exactly right (largely, the same way they had been going for the previous 10+ year, a historical anomaly) in order to make it work. I suspect most of these funds will be unwound not with bankruptcy but with severe haircuts for the LPs and break even or slight profit for the top dogs, and let's go heavy into RE courses and teach you how to get out of your paralysis type plays. 


     You hit all of the marks on this. Well done. 


    Yikes. The downsides of signing a PG....

    Document List (state.ny.us)



     Wow.... I couldn't even make it thru the full complaint, it was so compelling after a short time into it, it's just "wow". 

    See this is what I have been warning people of in MFH, and talking with many about, that there is these ticking bombs out there of operators who never really were professionals, and it was a disaster in process. 

    That on top of how many who had great intentions but capabilities never meet intentions. Or the "maintenance bombs", or or or..... 

    Now the time of accountability starts to come to bear. 

    And as this noted one shows, to those who think they will just swoop in and pick up an "easy buy", just write a check and it will be a simple take-over, think again. Those who run such a failed operation surely will have significantly degraded the assets and operations as well. And that is not a simple thing to turn-around. Nor cheap. 

    2Reply
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    1y
    Quote from @Chris Seveney:
    Yikes. The downsides of signing a PG....

    Document List (state.ny.us)



    This is SO much more than that.  This is the downside of taking on too much leverage.  The downside of preferred equity.  The downside of bridge debt.  The downside of financing your capital improvement plan with debt.  The downside of allowing your capital improvement budget dollars to be held in a lender-controlled account.  The downside of growing a real estate portfolio beyond one’s readiness for the challenges.  The downside of buying at the peak of the market.  The downside of adverse market cycles.  The downside of class C properties.  The downside of raising money from investors who didn’t evaluate the risks.  The downside of a cavalier approach to investing that relies on the hope that the investors don’t understand the risk that is being presented.  The downside of investors not appreciating how much sponsor selection matters when investing in a syndication.

    Now bundle all of the above into one package and what you have is the allegations wrapped up in that complaint, investors who are wiped out, a syndication sponsor and its “capital raisers” wrapped up in litigation and the leaders of this group who will likely face personal liability and bankruptcy. LLC's provide them no shield here.

    So, would-be syndicators, please take note:  please treat this business like a loaded weapon:  Handled carefully and with training and experience it can save your life. Handled improperly, it can cause serious injury. 

    Real estate syndication is not a road for the uninitiated to land instant wealth, work “the four hour work week”, or gather talking points about how many units you own.  It is a serious responsibility with serious consequences.  Please treat it as such so that you never see a document such as linked above with your name on it.

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    4Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y
    Quote from @Brian Burke:
    Quote from @Chris Seveney:
    Yikes. The downsides of signing a PG....

    Document List (state.ny.us)



    This is SO much more than that.  This is the downside of taking on too much leverage.  The downside of preferred equity.  The downside of bridge debt.  The downside of financing your capital improvement plan with debt.  The downside of allowing your capital improvement budget dollars to be held in a lender-controlled account.  The downside of growing a real estate portfolio beyond one’s readiness for the challenges.  The downside of buying at the peak of the market.  The downside of adverse market cycles.  The downside of class C properties.  The downside of raising money from investors who didn’t evaluate the risks.  The downside of a cavalier approach to investing that relies on the hope that the investors don’t understand the risk that is being presented.  The downside of investors not appreciating how much sponsor selection matters when investing in a syndication.

    Now bundle all of the above into one package and what you have is the allegations wrapped up in that complaint, investors who are wiped out, a syndication sponsor and its “capital raisers” wrapped up in litigation and the leaders of this group who will likely face personal liability and bankruptcy. LLC's provide them no shield here.

    So, would-be syndicators, please take note:  please treat this business like a loaded weapon:  Handled carefully and with training and experience it can save your life. Handled improperly, it can cause serious injury. 

    Real estate syndication is not a road for the uninitiated to land instant wealth, work “the four hour work week”, or gather talking points about how many units you own.  It is a serious responsibility with serious consequences.  Please treat it as such so that you never see a document such as linked above with your name on it.


    I worked for a big syndicator that got wiped out in the late 80s in N. CA  the war and the Earthquake and the market being very poor in N Ca as a result. I came out of that employment so wounded at what I saw and how it affected the two principals I swore I would never be  a syndicator the downside risk was just to REAL.  ITS ALL ABOUT the SPONSOR even great sponsors can have a project not work we all know that but they wont make the boneheaded mistakes we have seen all these others make the last few years.. keeping up with the Jones's .
    And or the social media darlings who can attract all these investors who are lulled into thinking these folks have to much to lose to let MY project go under.
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    3Reply
  • Brian BurkePro Member
    Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
    1y
    Quote from @Jay Hinrichs:
    And or the social media darlings who can attract all these investors who are lulled into thinking these folks have to much to lose to let MY project go under.

    This speaks to the point that I make ad nauseum that I sometimes get flamed for and that no one wants to believe.  All too often I read on BP about how passive investors should look for "skin in the game" because it "aligns interests."  I say that interests can never be aligned and us passive investors must come to terms with that.  And, there are a lot of ways to have "skin in the game," but does it even matter?

    To wit, the case at hand here.  These sponsors could be found personally liable for the loss of this pref equity and could wind up personally bankrupt.  Their careers in this industry could be finished.  That's a lot of "skin in the game," and where did it get anyone?  Did it improve results here?

    What really matters is investing with a competent, experienced sponsor that has survived market cycles, has proven to communicate the good and the bad, and doesn't extend too far out on the risk curve. Chasing IRR with shaky sponsors or exorbitant leverage is a recipe for disaster. For the last decade, a rising tide bailed out a lot of these sponsors/deals and no one got hurt. But the moment things didn't go perfectly, well, you see what happens...

    Podcast Guest on Show The Truth About Real Estate Investing in 2024 (What Investors NEED to Know)
    2Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    1y

    I've probably have made over $500,000 of errors thus far in REI. Chalk it up to education. You have to pay for consistent performance.

    Will restate:

    1.   There is no passive investing.

    2.   LP’s you are the banker.  You should stress test every deal and understand the outcome.

    3.  Doesn’t matter if the GP was a thief or incompetent, or if the world went upside down.  These are all items I have to challenge myself developing Self Storage locations and Country subdivisions. 

    4.  Just like I have paid for my mistakes and growth you need to verify where the GP is on the learning curve.

    5.  I have not looked at Passivepocket.  Hopefully it did not follow most of the LP recommendations on this post.   They want a list of good and bad GPs.  I would not give any value to 100 LPs who “like” a syndication.  Or 100 LP UP votes.  

    6.  I’ll invite again every LP on this post to list their due diligence list.   Then tell me how the Bad syndication failed versus their list.   If you dont have the issue on your list add it.  That way you’re smarter in your next deal.  All of you LPs should be making a post and asking BP to help improve it.  

    7.  Our next self storage development my son (23 years old) will invest $185,000 and my brother $100,000.  At the end of two years I will pay them 100% return.  $370,000 and $200,000.  They both are not LPs but have done deals with us.   They both know we budget 90% occupancy, but our model is successful at 65% occupancy as far as no loss of capital.  They know our payback period is 8 to 12 years.  But our loan amort is 20 or 25 years with a 5 or 7 year balloon with a 1.5 point increase limit in the rate.  

    Points:

    A.  They understand we have done 8 locations and have checklists that have improved since the first.  Experience.

    B.  We don’t penny pinch. We keep the same team, deal to deal.  Thus development operations are covered.

    C.  Financing swings are covered.

    D.  Market occupancy is covered.

    E. Cost of the building package and erection is covered. Concrete cost is an exposure since we can’t contract ahead.  Which is a 1/3 of the cost considering roads if needed.

    *****Do you have a checklist?  Why did your deal fail or not meet your expectations.  Don't respond about bad communications on a bad deal.*****


     Start small and Make Your Big Mistakes Early.

    It’s your money, you’re always right even if you’re wrong.  

    The sooner you take ownership of your processes, the sooner you will be sitting in Barritz, France having lunch.  Managing your business over the phone.

    Almost Passive investing.  Two calls to hire someone to manage mowing and snow; and another to manage operations it would truly be Passive.  But just like you the LP the upfront is active investing.

    3Reply
  • Cheryl A.
    Investor · UT · Member since 2018 · 33 posts · 26 votes
    1y
    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.

    Hi Scott, thanks for starting this thread. This happened to me recently. I invested two deals with Djuric Family Office (DFO) also know as Blake Capital Group. When the first deal failed I turned to BP to get answers to questions I had that were not being answered by DFO and share my experience with other LPs.

    Within a few days I received an email DFO stating:

    "I will be sending you a legal letter in the mail and email tomorrow regarding your false and misleading internet comments."

    To date no letter has been received.

    The second deal just failed with complete loss of all investments. I'll be updating my experience on BP, so who knows what will happen next.


    4Reply
  • Scott TrenchPro Member
    OP
    Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
    1y
    Quote from @Cheryl A.:
    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.

    Hi Scott, thanks for starting this thread. This happened to me recently. I invested two deals with Djuric Family Office (DFO) also know as Blake Capital Group. When the first deal failed I turned to BP to get answers to questions I had that were not being answered by DFO and share my experience with other LPs.

    Within a few days I received an email DFO stating:

    "I will be sending you a legal letter in the mail and email tomorrow regarding your false and misleading internet comments."

    To date no letter has been received.

    The second deal just failed with complete loss of all investments. I'll be updating my experience on BP, so who knows what will happen next.



     Cheryl - I am facing a VERY interesting situation (not with Djuric family office / Blake Capital Group but with another sponsor). 

    Basically, it is clear that this sponsor lost all of their investor's money, and multiple investors claim that the sponsor lost their money, ghosted them, and behaved inappropriately. 

    But, none of them are willing to discuss the matter on the record. We put a journalist on a particular story, and no source is willing to discuss the situation publicly. 

    To me, THAT is the story. LPs who feel mistreated/robbed/lied to are too scared to say anything. 

    You are an extremely rare breed in being willing to discuss a sponsor in a negatively light publicly. 

    How do we change this dynamic? We want people to discuss sponsors like they'd discuss plumbers - the good, the bad, and the ugly, with 5 star ratings. 

    The only place we can get some semblance of this is on PassivePockets.com, where some sponsors are reviewed by LPs behind an LP-only wall. 

    Why do you think folks are so afraid to speak up?

    Podcast Guest on Show #223
    BiggerPockets
    8Reply
  • Duke Giordano
    Investor · Passiveadvantage.com · Member since 2019 · 164 posts · 91 votes
    1y

    Agree with Scott, there needs to be more transparency in this industry and sponsors need to be held accountable for their performance and their action.  Passive pockets is one place to do this there are certainly other places where you can look in particular when deciding to invest in a deal beforehand since that's truly our only control point as a limited partner.  I'm afraid unfortunately over the next 6 to 12 months they will continue to be more stories like this, but hopefully on the other side we will come out a better industry for both sides.  

    1Reply
  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Scott Trench:
    Quote from @Cheryl A.:
    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.

    Hi Scott, thanks for starting this thread. This happened to me recently. I invested two deals with Djuric Family Office (DFO) also know as Blake Capital Group. When the first deal failed I turned to BP to get answers to questions I had that were not being answered by DFO and share my experience with other LPs.

    Within a few days I received an email DFO stating:

    "I will be sending you a legal letter in the mail and email tomorrow regarding your false and misleading internet comments."

    To date no letter has been received.

    The second deal just failed with complete loss of all investments. I'll be updating my experience on BP, so who knows what will happen next.



     Cheryl - I am facing a VERY interesting situation (not with Djuric family office / Blake Capital Group but with another sponsor). 

    Basically, it is clear that this sponsor lost all of their investor's money, and multiple investors claim that the sponsor lost their money, ghosted them, and behaved inappropriately. 

    But, none of them are willing to discuss the matter on the record. We put a journalist on a particular story, and no source is willing to discuss the situation publicly. 

    To me, THAT is the story. LPs who feel mistreated/robbed/lied to are too scared to say anything. 

    You are an extremely rare breed in being willing to discuss a sponsor in a negatively light publicly. 

    How do we change this dynamic? We want people to discuss sponsors like they'd discuss plumbers - the good, the bad, and the ugly, with 5 star ratings. 

    The only place we can get some semblance of this is on PassivePockets.com, where some sponsors are reviewed by LPs behind an LP-only wall. 

    Why do you think folks are so afraid to speak up?


     I agree. I think one thing people who do not want to go public is they can shift the story but focus on truth not opinions.  When you go blasting people for ponzi etc without proof I would never do that, but if you lost money in a deal a way to shape it was?

    Wow - did you see XYZ syndicator who owned 123 Main St was foreclosed on the deal and the property was taken back by the lender? This must be very unfortunate for the investors because they had only sourced 70% debt so 30% of the equity from investors went poof..

    Re: threat of legal letter, personally I would post that online and say "wow, see the response I finally get"... (Not legal advice or noting you should do this, just what I would do" and then ask "happy to let this play out in court and go to discovery - love to see how you financially handled this... and oh by the way, please refrain from destroying any documents, emails etc. as it relates to this deal for discovery purposes..."

    7e investments53 Reviews
    WebsiteView Page
    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    1y
    Quote from @Chris Seveney:
    Quote from @Scott Trench:
    Quote from @Cheryl A.:
    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.

    Hi Scott, thanks for starting this thread. This happened to me recently. I invested two deals with Djuric Family Office (DFO) also know as Blake Capital Group. When the first deal failed I turned to BP to get answers to questions I had that were not being answered by DFO and share my experience with other LPs.

    Within a few days I received an email DFO stating:

    "I will be sending you a legal letter in the mail and email tomorrow regarding your false and misleading internet comments."

    To date no letter has been received.

    The second deal just failed with complete loss of all investments. I'll be updating my experience on BP, so who knows what will happen next.



     Cheryl - I am facing a VERY interesting situation (not with Djuric family office / Blake Capital Group but with another sponsor). 

    Basically, it is clear that this sponsor lost all of their investor's money, and multiple investors claim that the sponsor lost their money, ghosted them, and behaved inappropriately. 

    But, none of them are willing to discuss the matter on the record. We put a journalist on a particular story, and no source is willing to discuss the situation publicly. 

    To me, THAT is the story. LPs who feel mistreated/robbed/lied to are too scared to say anything. 

    You are an extremely rare breed in being willing to discuss a sponsor in a negatively light publicly. 

    How do we change this dynamic? We want people to discuss sponsors like they'd discuss plumbers - the good, the bad, and the ugly, with 5 star ratings. 

    The only place we can get some semblance of this is on PassivePockets.com, where some sponsors are reviewed by LPs behind an LP-only wall. 

    Why do you think folks are so afraid to speak up?


     I agree. I think one thing people who do not want to go public is they can shift the story but focus on truth not opinions.  When you go blasting people for ponzi etc without proof I would never do that, but if you lost money in a deal a way to shape it was?

    Wow - did you see XYZ syndicator who owned 123 Main St was foreclosed on the deal and the property was taken back by the lender? This must be very unfortunate for the investors because they had only sourced 70% debt so 30% of the equity from investors went poof..

    Re: threat of legal letter, personally I would post that online and say "wow, see the response I finally get"... (Not legal advice or noting you should do this, just what I would do" and then ask "happy to let this play out in court and go to discovery - love to see how you financially handled this... and oh by the way, please refrain from destroying any documents, emails etc. as it relates to this deal for discovery purposes..."


    Cant lose a suit for telling the truth :)  Bottom line though Real estate has risk in all investments.. I know we have had deals not work over the years I mean 08 to 2010 all of us in the space took big equity hits myself included.
    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    1y

    @Duke Giordano, I wish I shared your optimism.  At the end of the day, while I do think the current situation will, and already has, reduced the number of unqualified syndicators, as soon as the market starts to rebound, it will be back in force.

    We are in a market where very few are trying to get into the space. But as soon as the market starts to loosen, deal flow increases and investment sentiment is less sour, a whole new batch of people will be back on these forums and elsewhere pitching how their 12 months of loan underwriting, and a few blog posts about how you calculate cap rates, qualify them to try to raise millions in investor capital.

    1Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    1y

    Investors bear responsibility for doing their due diligence on any investment they make - or being willing to suffer the consequences IF the sponsor/syndicator did the following and possessed the following 

    1. Laid out all the risks beforehand

    2. Vetted the investors so that it was reasonable to belief that each investor understood the risks and could afford to lose their investment

    3. Had the ability, experience, and knowledge to succeed

    4. Disclosed all fees, compensation and incentives

    5. Operated on a fiduciary capacity


    in other words if the above was done and the investment still went south, then that’s just x% outcome (risk) occurring, and a natural part of the investment process.  We’ve got to separate this type of loss from those in which the 5 items listed above weren’t followed. 

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    5Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free