Did Brandon Turner really lose $14M of investor money while pocketing $4.4M???

[James Wise]

I've been starting to hear rumors that Brandon Turner's company Open Door Capital has been losing a lot of investor money. I haven't really followed what he's been up to since he left BiggerPockets, but since I started hearing all of these rumors about mismanaged money and poorly performing investments, I started to look a bit into it. 

Below is what Google/AI had to say about the "Heights on Katy" deal in Houston, Texas. Apparently the GP's pocketed $4.4 million while losing $14 million investor dollars on the deal.

Anyone have any more insight into this deal / or others Brandon Turner's got going on? I don't know how reliable what Google/AI says below is, so I'd like to hear from folks that have more 1st hand info.

Is there fire behind all of this smoke?

[Russell Brazil]

Quote from @Chris Seveney:

Quote from @Don Konipol:

Like almost all social media innovations, BP was (is) heavy on tech - but the real estate personnel are mostly “lightweights”. 

This was obvious 15 years ago, but BP was still made into a valuable resource. Especially for the newer investor hoping to learn the basics of investing in SFR.
The fact that some people had a personal side agenda shouldn’t be surprising.  Contrary to Barry Minkow ( whom I believe is a career criminal) most deals gone bad are not fraud; they’re usually the result of a “surprise” in the market/economy, undercapitalization / over leverage, or less than competent management/organizers.  The ones that are fraud from the beginning, like Minkow’s ZZZZ Best, are a rarer occurrence. 

Here’s what I want to know when investing as a passive investor - is the head person a techie, a “salesperson” or a specialist in the particular type of investment being offered.  If the first or second, I’m out no matter how good the numbers look.  

This is of course no guarantee of successful investment.  But I want to eliminate the obvious highest risks. 

I follow that same principal, if the top dog is not in real estate with 10+ years I am out. When I researched appleway which made a lot of news in texas for going under, a simple search on the website saw both partners had very little real estate experience and their "project managers" were overseas VA's.... Red flags galore.

Regarding the other post on companies doing due diligence, they exist, Mick Law, Factright and others provide sponsor due diligence reports (They are not cheap), but they are very very detailed (we had a factright report done), and most sponsors would not pass the sniff test, which is why they do not get them.

 One of the big red flags I looked for over the last half decade was any offering that wasnt pricing in substantial interest rate hikes.  All of the ones I looked at did not have this, thus why I did not invest in any syndications over the last half decade.  Some of the ones I looked at turned out fine....usually because they sold the asset earlier than the anticipated hold period.  But many of the ones I looked at are in dire financial straights right now.

Additionally one of the things you mentioned in that they be in real estate for 10+ years. I didnt look at that metric per se, but what I saw over the last half decade was a number of flippers, small residential landlords, brrrr people who were getting into the syndication space.  Now as someone who sells both residential and commercial real estate, I understand the fundamental differences.  We sold numerous commercial properties to people who just didnt understand the risk of what they were buying. My sellers who sold at 2020-2022 knew they were selling at the top of the cycle. The buyers, didnt really have an idea that that was the case.

The inexperience of those doing these deals, and coming from more of a residential real estate background didnt understand the impact of interest rates.  While rising interest rates do not largely affect residential real estate, they do in fact affect commercial real estate.  The lack of understanding of interest rate risk, I believe is one of the fundamental causes of the current crisis.