Spotting an investment that will not end well

Syndications & Passive Real Estate Investing
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Spotting an investment that will not end well

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

Here is an email I received this AM. Here are some things that should jump out like a sore thumb:

1. Targeting 50% IRR. This should be a 100% pass and do not even read further.

2. Tout its a proven model - how many proven models do you know that contribute 50%

3. Email had no name in the signature. Only had a website link

4. Website was not complete and did not have any names or photos. If it did, I would go on linkedin and see what experience they had (for example that apple... company in TX had asset managers who were overseas VA's - curious how many of those investors knew that and could have spotted a thirty second search would have created a red flag).

5. FOMO - this is your chance. To me this is my chance to give a donation as I will never see this money again.


Share your thoughts, would any of you consider this? If so why?

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Noah WrightBusiness Member
USA, Nationwide · Member since 2024 · 156 posts · 86 votes
1y

If they're looking for $10,000 seed money and you have $10,000,000 sitting around - plus the due diligence checks out (legitimate opportunity) - that's relatively low risk for a good upshot.

If they're looking for $50,000 seed money and you have $75,000 liquid, absolutely not.

Personal financial position, coupled with due diligence, are important. Underwrite the opportunity like a bank, show me receipts, etc... I'd want to meet the person over zoom if not in person. Find character references for them after the meeting. I'm not investing based on an email. Good opportunities, early stage opportunities, may not have the best online presence, but be otherwise legitimate.

Also IRR is a vanity metric, it's the wrong measurement. Cash on cash return is what I'm looking for.

[email protected]320-282-8129
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  • Noah WrightBusiness Member
    USA, Nationwide · Member since 2024 · 156 posts · 86 votes
    1y

    If they're looking for $10,000 seed money and you have $10,000,000 sitting around - plus the due diligence checks out (legitimate opportunity) - that's relatively low risk for a good upshot.

    If they're looking for $50,000 seed money and you have $75,000 liquid, absolutely not.

    Personal financial position, coupled with due diligence, are important. Underwrite the opportunity like a bank, show me receipts, etc... I'd want to meet the person over zoom if not in person. Find character references for them after the meeting. I'm not investing based on an email. Good opportunities, early stage opportunities, may not have the best online presence, but be otherwise legitimate.

    Also IRR is a vanity metric, it's the wrong measurement. Cash on cash return is what I'm looking for.

    [email protected]320-282-8129
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  • Noah WrightBusiness Member
    USA, Nationwide · Member since 2024 · 156 posts · 86 votes
    1y

    Unison's co-founders:

    https://www.linkedin.com/in/james-riccitelli-64187466/
    Current: https://Unlock.com/

    https://www.crunchbase.com/person/michael-choupak
    Current: https://www.stork.ai/

    https://www.linkedin.com/in/rurikbradbury/
    Current: https://www.limborevolution.com

    [email protected]320-282-8129
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  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    1y

    @Chris Seveney, but you forgot to mention that the email subject had 3 fire emojis, 3 dollar sign emojis and some arrows to make sure you see it.

    This reminds me of a the language the Mogul Club uses.  
    WE ARE THE FIRST!  
    WE ARE BETTER!!  
    WE HAVE NO EXPERIENCE, BUT WE SAW OTHER PEOPLE MAKING A LOT OF MONEY SO WE JUMPED IN TOO!!!  
    WE ARE REVOLUTIONIZING AN INDUSTRY BY COPYING OTHERS AND DOING NOTHING ORIGINAL!!!!

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  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    @Chris Seveney  please send over this offering. Super interested in learning about this "proven model" to see if I can implement into my market :). Jokes aside, I believe @Noah Wright's post brings attention to another issue and that's the smaller investments many capital raisers are seeking. While I agree with what Noah shared about the individual with millions in the bank being able to make the $10K risky investment without a poor outcome impacting them, the capital raisers are not going to the investors with millions in the bank. I am willing to go so far as to say they intentionally are seeking investment sources who don't have the means or sophistication to conduct appropriate diligence.

    Sadly social media has made it far easier for these bad actor capital raisers to get in front of their target audience with ease. How many times do you see in these forums the investor who got swindled out of $5K, $10k etc. seeking advice on how to recover? It seems almost daily. The sad truth is there's rarely recourse available or even when there is, it's not economical to pursue and very few who get hurt know what they signed up for in the first place. This is all calculated in the decision making of these capital raisers. I anticipate this will become an issue with more frequent consequences because its never been easier to raise small amounts in volume, again thanks to social media. 

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Stuart Udis:

    @Chris Seveney  please send over this offering. Super interested in learning about this "proven model" to see if I can implement into my market :). Jokes aside, I believe @Noah Wright's post brings attention to another issue and that's the smaller investments many capital raisers are seeking. While I agree with what Noah shared about the individual with millions in the bank being able to make the $10K risky investment without a poor outcome impacting them, the capital raisers are not going to the investors with millions in the bank. I am willing to go so far as to say they intentionally are seeking investment sources who don't have the means or sophistication to conduct appropriate diligence.

    Sadly social media has made it far easier for these bad actor capital raisers to get in front of their target audience with ease. How many times do you see in these forums the investor who got swindled out of $5K, $10k etc. seeking advice on how to recover? It seems almost daily. The sad truth is there's rarely recourse available or even when there is, it's not economical to pursue and very few who get hurt know what they signed up for in the first place. This is all calculated in the decision making of these capital raisers. I anticipate this will become an issue with more frequent consequences because its never been easier to raise small amounts in volume, again thanks to social media. 


     I have someone trying to gaslight me on facebook now because they are claiming they can offer investors 30% cash on cash return for notes - which they just joined the note group. I called them out first that 30% is a joke and you cannot give that to investors and secondly cash on cash is not even a metric to be used for notes.

    Atleast he got to use some of that $10,000 education they probably paid for to post on social media. 

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  • Evan Polaski
    Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    1y

    @Chris Seveney, you simply DON'T UNDERSTAND how investments work.  Note investing is super safe, with no risk at all, because it is a note.  

    And it is EASY to make 30% in notes. What you do bring in equity from investors. Then you match that equity with a loan from a bank for 9%, and leverage up the note fund to 80% LTV. Then you invest that money in a super secure, no risk note with an operator who is already underwater on their original note. They will replace it at 18% interest. So, now, you only have 20% equity in the fund that is lending to the borrower that is 120% LTV, and you make money hand over fist. 30% is CONSERVATIVE. And since this is a note secured by real estate, it is ZERO RISK.

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @Evan Polaski:

    @Chris Seveney, you simply DON'T UNDERSTAND how investments work.  Note investing is super safe, with no risk at all, because it is a note.  

    And it is EASY to make 30% in notes. What you do bring in equity from investors. Then you match that equity with a loan from a bank for 9%, and leverage up the note fund to 80% LTV. Then you invest that money in a super secure, no risk note with an operator who is already underwater on their original note. They will replace it at 18% interest. So, now, you only have 20% equity in the fund that is lending to the borrower that is 120% LTV, and you make money hand over fist. 30% is CONSERVATIVE. And since this is a note secured by real estate, it is ZERO RISK.

     Evan

    Thankfully I am 100% up to speed and educated now from learning from this person.

    I cannot believe how lucky I must have been over the past few years with my investments- its like literally flipping a coin 600+ times and was able to call the right one 95%+ of the time - I am just THAT lucky - I may go play mega millions. 

    To add to the humor, I skiptrace the guy, I think he has more court cases against him than the weekend warrior training program /guru who has around $2M in judgments against him that he probably just took his weekend course from - because its comical that after this guru holds his course every new investor comes out of the wood work with the same facebook and email campaign that they have been teaching for the past ten years.. 

    PS: You also hurt my feelings with the caps lock.

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