Looks like another bad operator is at it again with an attempt to keep their poor investments alive, this time from Rise48. I received an email last week about the "opportunity" and watched Tyson Cobb's webinar. I've invested in two of the properties going into the fund and two others. I can't even understand how any of this is legal. Rise48 is raising preferred equity at a valuation that is not market, with income growth projections that are unreasonable, and putting $7,000,000 of new investor cash back in their pockets... $7,000,000!! and they're claiming that they are putting the first million into this fund. Math can sometimes be fuzzy for me but when you pay yourself $7 million and send back $1 million, you're not contributing. You're cashing out a net $6 million directly from investors that trust you with their savings. https://41098383.hs-sites.com/share/hubspotvideo/18605256691... https://www.wallstreetoasis.com/forum/real-estate/rise48-pos... I believe this is the second attempt to raise preferred equity as well. First time was from investment companies but no one was interested, so now they're offering a 18% preferred return in hopes of getting more unsuspecting retail capital. I wanted them to sell these properties years ago but I guess I can officially say goodbye to my money. Is this not another form of a capital call? Needless to say, I won't be investing. Based on what I saw of the projections, this preferred equity investment will likely be instantly wiped out as well. I know that there are a lot of ambitious capital raisers on this platform who have raised for Rise48 and I encourage you to please think about your investors before promoting bad investments again. I worked very hard for my money and I thought I was making sound investments with a trustworthy operator and it turns out to be the opposite, all the while being left in the dark until the last minute. These are a few of their oldest investments, so I'm assuming I'll be seeing similar "opportunities" on my other two investments in the future.

It looks like "Frank Sichelle" has now deleted his account. You falsely accused us of a ponzi scheme and extorting our investors, both of which are felonies. Our attorneys are in the process of filing a lawsuit against you, "John Doe," and will soon subpoena BiggerPockets to reveal your true identity by obtaining the the data from your IP Address. If it turns out that you are falsely posing as an investor or client of our company, then this is an additional crime which we will pursue you for to the fullest extent of the law.

The moment that LPs learn that their GP is actually not so friendly, and that he has somehow decided to replace paid lawyers with free legal advice sourced from clumsy ChatGPT queries

Rise48 Preferred Equity Fund / Capital Call?

Lu Kang

Investor · Lafayette Hill, PA · Member since 2015 · 27 posts · 27 votes

1y

Thanks for sharing, saw some of the webinar from the wallstreetoasis link.

Curious how they communciated this to the original investors, cause them seemed to infur on the webinar that the 18% is such a great deal and better then what we would have offered the original investors. With most of the investors buying in 2021/ 2022, doesn't seem like a consistent message.

1 Reply

Bruce Lynn
Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
1y
Quote from @Lu Kang:

Thanks for sharing, saw some of the webinar from the wallstreetoasis link.
I am in one deal and to me it is a capital call without saying it is a capital call. Basically pitched as if you don't participate, you'll be diluted. If I remember right they were asking for 40% of the initial investment and it was basically a preferred equity fund of 3-5 properties if I remember right. Paid back as those properties in the fund sell and above initial LP payback.
I get it....prices depressed, loan extensions, new interest rate caps, somewhat stable rents, fighting new build inventory concessions. Not what people projected either operators or investors. I think they've been subsidizing some of these properties for a while to try to avoid capital calls, but that probably couldn't last forever.
2 Reply

Jeremy Dyer

Investor · MN · Member since 2023 · 8 posts · 8 votes

1y

Thanks for sharing your thoughts. We take feedback seriously and always aim to improve. However, after reviewing our records, we couldn't find any history of you investing in any of our deals. Can you please clarify which investments you've been involved in with us? We want to ensure we understand your concerns fully and address them appropriately.

Please book a call on my calendar here to discuss any questions you have Looking forward to hearing from you.

1 Reply

Account Closed
OP
Investor · Member since 2024 · 19 posts · 51 votes
1y
Quote from @Jeremy Dyer:

We want to ensure we understand your concerns fully and address them appropriately.

Um, no thank you, I’ve seen how “concerns” from other investors have been addressed.
Also, thank you for the recent updates on the individual properties that a capital call is likely required. I’m glad Rise48 is finally admitting the need of capital calls and hope that the “we have never and don’t ever expect to issue a capital call” marketing is removed going forward.

Other areas that should be called out:
1) Disclose the distress in your current portfolio to existing investors as well as when marketing new investment opportunities. Even the preferred equity fund makes no reference to current values of the properties from brokers which I know opinions of value have been received.
2) Call out what “pay back working capital loans” for what is really is, putting cash back in Rise48’s pockets.
3) Stop lying about lenders requiring the above referenced GP loans to be paid back. That is just a flat out lie, no lender would have any issue with a GP contributing more capital to a property.
4) Stop highlighting positive financial leverage on your new investment opportunities when all you’re doing is paying massive fees upfront to buy down the rate. That is NOT positive financial leverage, it’s closer to a Ponzi scheme in which you’re raising additional investor capital in order to distribute it right back to them and claim it as operating cashflow.

We’re in a new era, it’s time to start protecting limited partners from deceptive investments.
7 Reply
Zach Haptonstall
Member since 2021 · 9 posts · 12 votes
1y
Quote from @Account Closed:

Quote from @Jeremy Dyer:

We want to ensure we understand your concerns fully and address them appropriately.

Um, no thank you, I’ve seen how “concerns” from other investors have been addressed.
Also, thank you for the recent updates on the individual properties that a capital call is likely required. I’m glad Rise48 is finally admitting the need of capital calls and hope that the “we have never and don’t ever expect to issue a capital call” marketing is removed going forward.

Other areas that should be called out:
1) Disclose the distress in your current portfolio to existing investors as well as when marketing new investment opportunities. Even the preferred equity fund makes no reference to current values of the properties from brokers which I know opinions of value have been received.
2) Call out what “pay back working capital loans” for what is really is, putting cash back in Rise48’s pockets.
3) Stop lying about lenders requiring the above referenced GP loans to be paid back. That is just a flat out lie, no lender would have any issue with a GP contributing more capital to a property.
4) Stop highlighting positive financial leverage on your new investment opportunities when all you’re doing is paying massive fees upfront to buy down the rate. That is NOT positive financial leverage, it’s closer to a Ponzi scheme in which you’re raising additional investor capital in order to distribute it right back to them and claim it as operating cashflow.

We’re in a new era, it’s time to start protecting limited partners from deceptive investments.
Hi Frank,

My name is Zach Haptonstall and I'm the CEO of Rise48 Equity. I was recently made aware of your post. Thank you for listing out our concerns.

We've done an extensive search of our investor portal and our subscription documents, and we have no record of a "Frank Sichelle" ever investing in any of our properties as you claim. In addition, we did an extensive search on the internet and cannot find any evidence of a "Frank Sichelle" even existing as a person at all. This is bizarre because you claim to be a physician and typically physicians have some type of online footprint like medical licensing, a company, or at least a LinkedIn account.

I'm not sure if you're a competitor posting under a fictitious name or what your motives are. But we don't appreciate you falsely accusing us of running a ponzi scheme on a public platform. We take these false accusations very seriously and our legal team is reaching out to BiggerPockets to disclose your true identity.

We always treat any investor concerns with transparency and prompt communication. If you truly are an investor with us, then you know that you can email me anytime and I'll get on a call or meet in person anytime.

Please feel free to reach out to me anytime if you'd like to chat.
3 Reply

Account Closed

OP

Investor · Member since 2024 · 19 posts · 51 votes

1y

@Jeremy Dyer - I see that capital calls went out on two more properties (Rise North Ridge and Rise Trailside). How many of capital calls have gone out this year and how many do you expect to issue the remainder of the year?

I also see that Rise48 acquired a new property last week. Do you and the Rise48 team plan on disclosing the distress throughout your portfolio? It seems like an important risk factor that investors should be aware of.

2 Reply

Account Closed

OP

Investor · Member since 2024 · 19 posts · 51 votes

1y

Out with more capital calls this month... If I'm counting correctly, that makes 10? but I may have missed one or two though. If you look at their own portfolio timeline, those 10 properties are first 10 on their list of 21 chronologically ordered so seems to reason another 9 more capital / "preferred equity" calls are coming. Possibly some of the 23 investments included as "cash flow positive" will also make this list as they are only cashflow positive because the over raised investor equity upfront to buy very low rate caps and are essentially just distributing initial equity back to investors.

I'm proud that they finally stopped the marketing campaign of "we have never done a capital call and don't plan on doing a capital call in 2024". Key word 2024 because as soon as 2025 hit, they've done 10 capital / "preferred equity" calls. I wonder what this means for their new slogan... "we DO NOT plan to lose capital on any properties in 2025." As long as they're not planning on it, I suppose.

Old Marketing

New Marketing - Look familiar?

Last but not least, let's see how likely their projections are for their preferred equity fund (Credit m.stanfield on X). Red highlights are their projections, blue highlights are recent comparable sales. For their projections to come true, they just need the Phoenix market to double in the next 2 years and for 1960 - 1980s properties to sell on average for over $400 per square foot.

5 Reply

Davel Patel

Member since 2023 · 1 post · 0 votes

1y

Hi Frank thank you for continuing to post about these Rise48 updates. I was a prospective investor a few years ago and ultimately decided against pulling the trigger on investing with them. Hopefully more prospective investors will find these posts about their latest performances.

0 Reply

Account Closed
OP
Investor · Member since 2024 · 19 posts · 51 votes
1y
Quote from @Davel Patel:

Hi Frank thank you for continuing to post about these Rise48 updates.
You're welcome! There is not enough information online about most groups and investors need better transparency when investing in private offerings. Investors probably need to do more research like you did but the tactics that I'm seeing today from unethical sponsors are disappointing and perhaps crossing a line beyond just unethical.
For example, Rise48 has made the statement on one of their capital calls that if you contribute additional funds, the new funds will not only be in a priority position in the capital stack (which is normal) but they will also move the initial capital of those who contribute additional funds to also be in a priority position above the initial capital of those who do not contribute. To me that's financial extortion saying "contribute additional funds or else...". I won't claim to know if that is legal or not but if there are any attorneys on the bigger pockets platform, I would be very curious to hear their opinion on whether a sponsor has the ability to unilaterally erase an investors capital.
2 Reply

Brian BurkePro Member

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

1y

Quote from @Frank Sichelle:

For example, Rise48 has made the statement on one of their capital calls that if you contribute additional funds, the new funds will not only be in a priority position in the capital stack (which is normal) but they will also move the initial capital of those who contribute additional funds to also be in a priority position above the initial capital of those who do not contribute. To me that's financial extortion saying "contribute additional funds or else...". I won't claim to know if that is legal or not but if there are any attorneys on the bigger pockets platform, I would be very curious to hear their opinion on whether a sponsor has the ability to unilaterally erase an investors capital.

It’s legal if the operating agreement says they can do this. Remedies for non-participation in a capital call should be spelled out in the operating agreement.

If I saw a provision allowing the sponsor to unilaterally create share classes with rights superior to my investment class at will, that would be a hard-stop for me as an investor. Even placing the newly-called capital in priority is questionable—but again it depends on what the operating agreement says.

Where this gets messy is if the operating agreement is silent on capital calls and remedies.

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

5 Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
1y
Quote from @Brian Burke:

Quote from @Frank Sichelle:
For example, Rise48 has made the statement on one of their capital calls that if you contribute additional funds, the new funds will not only be in a priority position in the capital stack (which is normal) but they will also move the initial capital of those who contribute additional funds to also be in a priority position above the initial capital of those who do not contribute. To me that's financial extortion saying "contribute additional funds or else...". I won't claim to know if that is legal or not but if there are any attorneys on the bigger pockets platform, I would be very curious to hear their opinion on whether a sponsor has the ability to unilaterally erase an investors capital.

It’s legal if the operating agreement says they can do this. Remedies for non-participation in a capital call should be spelled out in the operating agreement.

If I saw a provision allowing the sponsor to unilaterally create share classes with rights superior to my investment class at will, that would be a hard-stop for me as an investor. Even placing the newly-called capital in priority is questionable—but again it depends on what the operating agreement says.

Where this gets messy is if the operating agreement is silent on capital calls and remedies.

Where I got my baptisim by fire was working for a syndicator in Sacramento and the Gold country.. his operating agreement allowed him to make loans out of the reserve accounts to any investment he deemed appropriate. U know buried in the 50 page agreement.. They had about 200 separate properties from small garden apartments in SAC to big land deals ( I ran their land development end as an independent contractor) Brian you will like this one.. I put together the purchase of Borax Lake property for these guys and worked on a golf course and development around the lake. Of course they lost it as they lost their entire business.
Having had a front row seat to that billion dollar portfolio being eaten up and spit out I was traumatized :) So to me its like Deja Vu all over again.. And the domino that fell first was two apartments they bought in Dallas thinking the grass was greener.
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2 Reply
Zach Haptonstall
Member since 2021 · 9 posts · 12 votes
1y
Quote from @Brian Burke:

Quote from @Frank Sichelle:
For example, Rise48 has made the statement on one of their capital calls that if you contribute additional funds, the new funds will not only be in a priority position in the capital stack (which is normal) but they will also move the initial capital of those who contribute additional funds to also be in a priority position above the initial capital of those who do not contribute. To me that's financial extortion saying "contribute additional funds or else...". I won't claim to know if that is legal or not but if there are any attorneys on the bigger pockets platform, I would be very curious to hear their opinion on whether a sponsor has the ability to unilaterally erase an investors capital.

It’s legal if the operating agreement says they can do this. Remedies for non-participation in a capital call should be spelled out in the operating agreement.

If I saw a provision allowing the sponsor to unilaterally create share classes with rights superior to my investment class at will, that would be a hard-stop for me as an investor. Even placing the newly-called capital in priority is questionable—but again it depends on what the operating agreement says.

Where this gets messy is if the operating agreement is silent on capital calls and remedies.
Hi Brian,

Thanks for your thoughts here. Yes I agree, it is critical to have all of the details of the structure fully disclosed in the operating agreement. Our structure is 100% compliant and is fully disclosed to investors. These documents were drafted by our SEC attorney and investors even voted to approve the new structure, per the operating agreement.

Frank Sichelle falsely claims that we made a unilateral decision to change the structure, when in fact this was voted on and approved by investors in the deal. Frank Sichelle also is seemingly posting from a fictitious account and we have no record of him ever investing with us, so his credibility and knowledge of these structures are questionable at best.

2 Reply
Chris Germain
Member since 2024 · 2 posts · 2 votes
1y
Quote from @Brian Burke:

Quote from @Frank Sichelle:
If language governing capital calls does not exist, or if it does exist but it is not investor friendly, do not proceed with any further due diligence on that deal. It's that simple.
0 Reply

Brian BurkePro Member

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

1y

@Jay Hinrichs I suspect that “lunch eating” is about to see a repeat performance. Owners of class C apartments with matured or maturing loans may feel a sense of hope now that the 10-year is dropping. With the thought that lower rates will allow them to escape disaster by refinancing, many of these will have little to show for it. All the lower rates will do is encourage their lenders to force a sale at a complete loss to the owners because the lenders see lower rates providing hope that a buyer at or near loan value will materialize.

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

3 Reply

Account Closed

OP

Investor · Member since 2024 · 19 posts · 51 votes

1y

Just another big sponsor threatening the smaller community for providing transparency... typical.

@Zach Haptonstall Please let me know where I made false accusations and I will gladly recant my statements. I tried to include all supporting information, links, articles, etc. where possible. In regards to the two items you noted:

1) The unilateral decisions referenced was an open question for a member of the community hopefully with a legal background to opine because I said I did not have one.

2) The comment regarding "closer to a ponzi scheme" is in reference to the practice of claiming positive financial leverage on loans that have an interest rate falsely giving the illusion of positive leverage because interest has been prepaid either through a buydown or a lower than market interest rate cap. What this means is that investor's initial capital contribution is used to artificially inflate cashflow from operations and distributions. I made no reference to Rise48 being a ponzi scheme. Please let me know if this method is not used by Rise48 and I will even make sure to recant my statement regarding claiming positive financial leverage.

I believe those were the two items that you noted but please let me know if I was incorrect about anything else (number of capital calls, repayment of funds to Rise48, valuations, etc.).

0 Reply

Zach Haptonstall
Member since 2021 · 9 posts · 12 votes
1y
Quote from @Account Closed:

Just another big sponsor threatening the smaller community for providing transparency... typical.
@Zach Haptonstall Please let me know where I made false accusations and I will gladly recant my statements. I tried to include all supporting information, links, articles, etc. where possible. In regards to the two items you noted:
1) The unilateral decisions referenced was an open question for a member of the community hopefully with a legal background to opine because I said I did not have one.
2) The comment regarding "closer to a ponzi scheme" is in reference to the practice of claiming positive financial leverage on loans that have an interest rate falsely giving the illusion of positive leverage because interest has been prepaid either through a buydown or a lower than market interest rate cap. What this means is that investor's initial capital contribution is used to artificially inflate cashflow from operations and distributions. I made no reference to Rise48 being a ponzi scheme. Please let me know if this method is not used by Rise48 and I will even make sure to recant my statement regarding claiming positive financial leverage.
I believe those were the two items that you noted but please let me know if I was incorrect about anything else (number of capital calls, repayment of funds to Rise48, valuations, etc.).

It looks like "Frank Sichelle" has now deleted his account. You falsely accused us of a ponzi scheme and extorting our investors, both of which are felonies. Our attorneys are in the process of filing a lawsuit against you, "John Doe," and will soon subpoena BiggerPockets to reveal your true identity by obtaining the the data from your IP Address.
If it turns out that you are falsely posing as an investor or client of our company, then this is an additional crime which we will pursue you for to the fullest extent of the law.
3 Reply
Chris Germain
Member since 2024 · 2 posts · 2 votes
1y
Quote from @Zach Haptonstall:

It looks like "Frank Sichelle" has now deleted his account. You falsely accused us of a ponzi scheme and extorting our investors, both of which are felonies. Our attorneys are in the process of filing a lawsuit against you, "John Doe," and will soon subpoena BiggerPockets to reveal your true identity by obtaining the the data from your IP Address.
If it turns out that you are falsely posing as an investor or client of our company, then this is an additional crime which we will pursue you for to the fullest extent of the law.

The moment that LPs learn that their GP is actually not so friendly, and that he has somehow decided to replace paid lawyers with free legal advice sourced from clumsy ChatGPT queries

2 Reply
Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
1y
Quote from @Chris Germain:

The moment that LPs learn that their GP is actually not so friendly, and that he has somehow decided to replace paid lawyers with free legal advice sourced from clumsy ChatGPT queries

I have not invested in their offerings but was responding in general to your comment - I do wonder how many of these GP's have actually sued a LP/investor (in this case they said its not an investor) - but I am curious as the moment a case is filed that opens up discovery and the GP having to prove it wrong, and all of that information then becomes public in the courts.
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3 Reply

Dan Rowley

Investor · Cary, NC · Member since 2012 · 214 posts · 194 votes

1y

There's a 3rd party site that is dedicated to Syndication group ratings/reviews. I'd encourage any Rise48 investors to weigh in on your experiences, either positive or negative. https://investclearly.com/sponsors/rise48-equity

4 Reply

Jeremy Dyer

Investor · MN · Member since 2023 · 8 posts · 8 votes

11mo

Like many operators, we faced short-term headwinds on assets acquired in late 2021 and 2022 during the sharpest interest rate spike and largest new supply wave in modern multifamily history.

Those challenges are now largely behind us. We’ve successfully recapitalized all loans and are working on improving the property performance and executing our business plan as supply challenges dissipates and the market improves.

We’re proud that throughout this period, we never missed a single debt payment to any lender, nor lost a dollar of investor capital. With interest rates trending downward, concessions tapering, and new supply meaningfully declining in our core markets, we’re extremely well positioned for the next phase of the cycle.

1 Reply

Rich Serfnan

Member since 2025 · 3 posts · 7 votes

9mo

Hey Jeremy,

Please provide updates on the following properties.

Rise at the Preserve - NOI DSCR of 0.64x w/ pending maturity 07/26

Rise Canyon West - NOI DSCR of 0.55x w/ original maturity on 05/25

Rise North Mountain - NOI DSCR of 0.57x w/ extended maturity of 04/2

Rise at the Palms - NOI DSCR of 0.45x w/ extended maturity of 05/26

0 Reply

Jeremy Dyer

Investor · MN · Member since 2023 · 8 posts · 8 votes

9mo

Hi Rich,

Thanks for reaching out and for the thoughtful questions. The third-party reporting you’re referencing is inaccurate and does not reflect the loan restructures we completed in the first half of 2025. As mentioned earlier, we successfully recapitalized each of these assets by purchasing new interest rate caps at lower strike rates and depositing significant interest reserves with the lenders to cover any shortfalls. As a result, all these loans are extended into 2027 and 2028 and are cash-flow positive with the reserves we’ve raised.

Below is the accurate data as of Q3, 9/30, reflecting the updated interest rate caps and reserve structure:

Rise at the Preserve

Interest Rate (with new cap): 4.9%
DSCR as of 9/30: 0.98x
Cash-flow positive with interest reserves in place
Maximum maturity date: April 2027 (currently extended through July 2026 with an optional extension)

Rise Canyon West

Interest Rate (with new cap): 4.6%
DSCR as of 9/30: 0.98x
Cash-flow positive with interest reserves in place
Maximum maturity date: April 2027

Rise North Mountain

Interest Rate (with new cap): 4.5%
DSCR as of 9/30: 1.08x
Cash-flow positive with interest reserves in place
Maximum maturity date: May 2028

Rise at the Palms

Interest Rate (with new cap): 4.5%
DSCR as of 9/30: 0.91x
Cash-flow positive with interest reserves in place
Maximum maturity date: May 2028

The DSCRs shown in third-party databases do not account for the new caps or the funded reserves and therefore materially misstate the current risk profile of these loans.

1 Reply

Rich Serfnan

Member since 2025 · 3 posts · 7 votes

9mo

A bit of a oxymoron to say that they are cash flowing if they require pre-funded interest rate reserves to cover debt service shortfalls. What happens to the DSCR if you assumed today's interest rates without a buydown?

1 Reply

Jeremy Dyer
Investor · MN · Member since 2023 · 8 posts · 8 votes
9mo
That’s a fair point, and I appreciate you calling it out.

You’re correct that interest reserves are not the same as pure operating cash flow. When we refer to these assets as cash-flow positive, we’re being specific to the capital structure in place today: operating NOI covers expenses and a portion of debt service, with any remaining shortfall intentionally covered by lender-approved, pre-funded interest reserves that were capitalized during the recapitalization.

On DSCR, if you assumed today’s unhedged floating rates with no buydown or interest rate cap, DSCR would be below lender minimums across much of the multifamily market, this is exactly why lenders are requiring caps, buydowns, or reserves as a condition to extend loans.

With the current rate caps in place, the effective debt service produces DSCRs that are compliant under the modified loan terms, with maturities extended into 2027–2028. As NOI improves through stabilization and rent growth, reliance on reserves declines and DSCR strengthens organically.
1 Reply

Rise48 Preferred Equity Fund / Capital Call?

Rise48 Preferred Equity Fund / Capital Call?

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